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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
UJB Financial Corp.
(Name of Issuer)
Common Stock, $1.20 par value
(Title of Class of Securities)
902760107
(CUSIP Number)
Roger Mehner, Esq.
Bourne, Noll & Kenyon
382 Springfield Avenue
Summit, New Jersey 07901
(908) 277-2200
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
September 11, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /x/. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 902760107
1. Name of Reporting Person: The Summit Bancorporation
I.R.S. Identification No.: 22-2007124
2. Check the Appropriate Box if a Member of a Group
(a)
(b)
3. SEC Use Only
4. Source of Funds: WC, BK
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
6. Citizenship or Place of Organization: New Jersey
Number of Shares 7. Sole Voting Power: 7,088
Beneficially
Owned by Each 8. Shared Voting Power: 0
Reporting Person
With 9. Sole Dispositive Power: 7,088
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 7,088
12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares /X/ (1)
13. Percent of Class Represented by Amount in Row (11): .012% of
outstanding shares
14. Type of Reporting Person: CO, HC
(1) The Reporting Person has entered into a Stock Option Agreement covering up
to 11,450,000 shares of UJB Common (as defined herein). Unless and until
the option granted thereunder is exercised, the Reporting Person disclaims
beneficial ownership of the shares covered thereby.
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ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities to which this Schedule 13D
relates is common stock, par value $1.20 per share, of UJB Financial
Corp. ("UJB Common"). UJB Financial Corp. ("UJB") is a New Jersey bank
holding corporation, with its principal executive office at 301
Carnegie Center, Princeton, New Jersey 08543-2066.
ITEM 2. IDENTITY AND BACKGROUND.
The reporting person, The Summit Bancorporation ("Summit"), is a New
Jersey corporation with its principal office and address of One Main
Street, Chatham, New Jersey 07928. Summit is a bank holding company
registered under the Bank Holding Company Act of 1956 as amended, and
is principally engaged in the business of managing and controlling
banks and activities closely related to banking.
Filed as Schedule I to this Schedule 13D is a list of the executive
officers and directors of Summit containing the following information
with respect to each such person: (a) name, (b) business address and
(c) present principal occupation or employment, and the name and, if
different than such person's business address, the address of any
corporation or other organization in which such employment is
conducted. Each person listed in Schedule I is a United States citizen.
During the past five years, neither Summit nor, to the best of Summit's
knowledge, any person named in Schedule I (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a
result was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws, or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On September 11, 1995, UJB and Summit entered into a Stock Option
Agreement (the "Option Agreement") pursuant to which, in consideration
of the mutual covenants and agreements contained therein, in the Summit
Option Agreement (defined below) and in the Merger Agreement (defined
below), Summit acquired from UJB and UJB granted to Summit an option
(the "Option") to purchase, under certain circumstances, none of which
has occurred as of the date hereof, up to 11,450,000 shares of UJB
Common but not more than 19.9% of the shares of UJB Common then issued
and outstanding without consideration of any shares of UJB Common
subject to or issued pursuant to the Option, subject to adjustment as
provided therein. The exercise price under the Option Agreement is
$36.625 per share, subject to adjustment as provided therein. The
maximum aggregate amount of funds required to exercise the Option in
full would be $419,356,250.00. If and when the Option is exercised,
Summit's source of funds will be either working capital or funds
borrowed from one or more banks in the ordinary course of business. The
identity of such bank or banks has not yet been determined.
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ITEM 4. PURPOSE OF TRANSACTION.
On September 10, 1995, Summit and UJB entered into an Agreement and
Plan of Merger (the "Merger Agreement") providing for, among other
things, (i) the merger of Summit into UJB (the "Merger"); (ii) the
exchange of each outstanding share of the Common Stock of Summit
("Summit Common") for 0.90 shares of UJB Common, with cash being paid
in lieu of issuing fractional shares of UJB Common; and (iii) the
exchange of each outstanding share of the $25 stated value Adjustable
Rate Cumulative Preferred Stock of Summit for one share of a newly
created class of Preferred Stock of the surviving corporation in the
Merger designated the $25 stated value Adjustable Rate Cumulative
Preferred Stock, all upon the satisfaction of the terms and conditions
set forth in the Merger Agreement.
On September 11, 1995 in connection with and in consideration of the
execution of the Merger Agreement, UJB granted to Summit the Option.
Simultaneously, Summit, as issuer, and UJB, as grantee, executed a
Stock Option Agreement identical in all respects to the Option
Agreement, except with respect to exercise price, number of shares and
identity of issuer and grantee (the "Summit Option Agreement"). In the
Summit Option Agreement, Summit granted UJB an option (the "Summit
Option") to purchase, under certain circumstances, none of which has
occurred as of the date hereof, up to 19.9% of the outstanding shares
of Summit Common. The exercise prices of the Summit Option and the UJB
Option, respectively $26.75 and $36.625, were arrived at by mutual
agreement of the parties.
UJB and Summit, in accordance with the terms of the Merger Agreement,
plan to merge Summit with and into UJB, upon the satisfaction of all
conditions set forth in the Merger Agreement. The Option was acquired
by Summit and granted by UJB for the purpose of decreasing the
likelihood that third parties would initiate actions, including the
acquisition of significant amounts of UJB Common, having the effect of
interfering with the contractual relationship established by the Merger
Agreement or hindering the consummation of the Merger contemplated by
the parties and of assisting UJB, if necessary, in obtaining the
requisite shareholder approval of the Merger.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) (i) The 11,450,000 shares of UJB Common subject to the
Option represent 19.9% of the shares of UJB Common that
would be issued and outstanding without consideration
of any shares of UJB Common subject to or issued
pursuant to the Option. Unless and until the Option is
exercised, Summit disclaims beneficial ownership of the
UJB Common subject to the Option.
(ii) The best of Summit's knowledge, no executive officer or
director of Summit beneficially owns UJB Common except
as identified on Schedule II to this Schedule 13D.
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(b)(i) Summit would possess the sole power to exercise the
Option until termination of the Option in accordance
with the terms of the Option Agreement. The Option does
not carry any voting rights. Upon exercise of the
Option in whole or in part, Summit would possess the
sole power to vote and dispose of the shares of UJB
Common acquired thereby, subject to certain conditions
and restrictions contained in the Option Agreement. UJB
would have the right, under certain circumstances, to
repurchase from Summit, the Option and any shares of
UJB Common acquired upon exercise of the Option.
(ii) To the best of Summit's knowledge, all persons
identified on Schedule II have the sole power to vote
and dispose of their shares of UJB Common.
(c) Other than the acquisition of the Option, no
transactions in UJB Common were effected during the
past sixty days by Summit and, to the best of Summit's
knowledge, no such transactions were effected by
executive officers and directors of Summit except as
identified on Schedule II.
(d) No other person is known to have the right to receive
or the power to direct the receipt of dividends from,
or the proceeds from the sale of, either the UJB
Common subject to the Option or the UJB Common
identified on Schedule II.
(e) Inapplicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Under the terms of the Option Agreement and the Merger Agreement,
Summit has rights with respect to securities of UJB. See particularly,
Section 1.03 of the Merger Agreement and Section 1 of the Option
Agreement. Both Agreements are attached as Exhibits hereto and are
incorporated herein and made a part hereof.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Agreement and Plan of Merger dated September 10, 1995 between
UJB and Summit.
(b) Stock Option Agreement dated September 11, 1995 between UJB
and Summit.
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 21, 1995 The Summit Bancorporation
By: /s/ John R. Feeney
----------------------------
John R. Feeney, Senior Group
Executive Vice President
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Schedule I
The following is a list of the executive officers and directors of
Summit as of September 20, 1995:
Executive Officers
Thomas D. Sayles, Jr.
Chairman
Robert G. Cox
President and C.E.O.
John R. Feeney
Senior Group Executive Vice President
Dennis S. McChesney
Senior Group Executive Vice President
Elwood L. Bowman, II
Member of Management Executive Committee
James S. Little
Member of Management Executive Committee
Stewart E. McClure, Jr.
Member of Management Executive Committee
Richard J. Ranelli
Member of Management Executive Committee
Barry S. Duerk
Senior Vice President and Senior Investment Officer
John F. Kuntz
Senior Vice President, General Counsel
and Corporate Secretary
Alfred J. Soles
Senior Vice President and Controller
The business address for each executive officer is The Summit
Bancorporation, One Main Street, Chatham, New Jersey 07928.
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Directors:
Name, Business Address (Unless Otherwise
Specified) and Principal Occupation
Allan G. Anderson
President, G. Anderson Agency
12001 Long Beach Boulevard
Haven Beach, NJ 08008
S. Rodgers Benjamin
President, Flemington Fur Company
8 Spring Street
Flemington, NJ 08822
James C. Brady, Jr.
Partner, Mill House Associates L.P.
Box 351, Gladstone, NJ 07934
Robert G. Cox
President and C.E.O.
The Summit Bancorporation
1 Main Street
Chatham, NJ 07928
Samuel V. Gilman, Jr.
Former Senior Vice President
The Chubb Corporation
Residence:
129 Ridge Road
Rumson, NJ 07760
Dr. William Boyce Lum
Clinical Psychologist/Psychoanalyst
58 Chatham Road
Short Hills, NJ 07078
S. Griffin McClellan III
Former Chairman and C.E.O. of Crestmont Financial Corp.
Residence:
23 Cedar Road
Whitehouse Station, NJ 08889
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Name, Address and
Principal Occupation
Robert W. Parsons Jr.
President, The Hyde and Watson Foundation
437 Southern Boulevard
Chatham, NJ 07928
Thomas D. Sayles Jr.
Chairman, The Summit Bancorporation
1 Main Street
Chatham, NJ 07928
Reeve Schley III
Artist/Instructor
National Academy of Design
Residence:
Box 254
Whitehouse, NJ 08888
Orin R. Smith
President and C.E.O.
Engelhard Corporation
101 Wood Avenue
Iselin, NJ 08830
Douglas G. Watson
President, Pharmaceuticals Division
Ciba-Geigy Corporation
556 Morris Avenue
Summit, NJ 07901
Kate B. Wood
President, Burkewood
Communications Corporation
Suite B-7, 601 Ewing Street
Princeton, NJ 08540
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Schedule II
Name Shares Beneficially Owned
---- -------------------------
1. Kate B. Wood 1,050 shares of UJB Common, 1000 of which
were bought on September 18, 1995 at a
price of $33.375 per share.
2. Orin R. Smith 6,000 shares of UJB Common, 5,000 of which
were bought on September 15, 1995 at a
price of $33.50 per share and 1,000 of
which were bought on September 18, 1995 at
a price of $33.00 per share.
3. Alfred J. Soles 38 shares of UJB Common. None purchased
within the last sixty days.
All transactions were effected through normal brokers' transactions.
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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated September 10, 1995, between UJB
Financial Corp., a New Jersey business corporation ("UJB"), and The Summit
Bancorporation, a New Jersey business corporation ("Summit").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of UJB and Summit deem it
advisable and in the best interests of their respective shareholders to merge
Summit into UJB ("Merger") pursuant to the laws of the State of New Jersey and
this Agreement and Plan of Merger ("Agreement");
WHEREAS, the Board of Directors of UJB and Summit have each determined
that the Merger and the other transactions contemplated hereby are consistent
with, and in furtherance of their respective business strategies and goals;
WHEREAS, to effectuate the Merger, the parties hereby adopt a plan of
reorganization in accordance with the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ("Code");
WHEREAS, UJB and Summit intend on the date after the date of this
Agreement and in consideration of this Agreement to enter into the UJB Stock
Option Agreement (the "UJB Option Agreement") attached hereto as Exhibit A and
the Summit Stock Option Agreement (the "Summit Option Agreement"; and together
with the UJB Option Agreement, the "Option Agreements") attached hereto as
Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Option Agreements, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I.
GENERAL PROVISIONS
Section 1.01. The Merger.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Effective Time (as defined at Section 1.06), Summit shall be
merged with and into UJB pursuant to and in accordance with the provisions of,
and with the effect provided in, the New Jersey
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Business Corporation Act, as amended ("New Jersey Act") (UJB as the surviving
corporation being hereinafter sometimes referred to as the "Surviving
Corporation").
Section 1.02. Capital Stock of UJB. All shares of the capital stock of
UJB outstanding immediately prior to the Effective Time shall be unaffected by
the Merger and shall remain outstanding immediately thereafter.
Section 1.03. Terms of Conversion of Summit Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of any shareholder of Summit:
(1)(A) All shares of the Common Stock, no par value, of Summit
("Summit Common") which immediately prior to the Effective
Time are either owned beneficially by UJB or a subsidiary of
UJB (other than Summit Common held in a fiduciary capacity or
as a result of debts previously contracted), if any, or held
in the treasury of Summit, if any, shall be canceled and
retired and no cash, securities or other consideration shall
be paid or delivered under this Agreement in exchange for
such Summit Common; and
(B) Subject to Sections 1.03(a)(1)(A) and 1.08, each share of
Summit Common outstanding immediately prior to the Effective
Time shall be converted in accordance with the New Jersey Act
into .9 shares ("Exchange Ratio") of the Common Stock, par
value $1.20 per share, of UJB ("UJB Common").
(2)(A) All shares of $25 stated value Adjustable Rate Cumulative
Preferred Stock of Summit ("Summit Preferred") which
immediately prior to the Effective Time are either owned
beneficially by UJB or a subsidiary of UJB (other than Summit
Preferred held in a fiduciary capacity or as a result of
debts previously contracted), if any, or held in the treasury
of Summit, if any, shall be canceled and retired and no cash,
securities or other consideration shall be paid or delivered
under this Agreement in exchange for such Summit Preferred;
and
(B) Subject to Section 1.03(a)(2)(A), each share of Summit
Preferred outstanding immediately prior to the Effective Time
shall be converted into one share of $25 stated value
Adjustable Rate Cumulative Preferred Stock of UJB ("UJB
Preferred"), a class of UJB Preferred Stock containing the
same relative rights, preferences and limitations as the
Summit Preferred.
(b) UJB Common and UJB Preferred are sometimes collectively referred to
herein as "UJB Stock" and Summit Common and Summit Preferred are sometimes
collectively referred to herein as "Summit Stock".
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Exhibit 1
(c) In the event that, from the date hereof to the Effective Time, the
outstanding UJB Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or there occurs other like changes in the outstanding shares
of UJB Stock, the Exchange Ratio and, if necessary, the form and amount of UJB
capital stock issuable in the Merger in exchange for Summit Stock shall be
appropriately adjusted.
Section 1.04. Reservation of UJB Stock; Issuance of Shares Pursuant to
the Merger. UJB shall reserve and make available for issuance to holders of
Summit Stock in connection with the Merger, on the terms and subject to the
conditions of this Agreement, sufficient shares of UJB Stock (which shares, when
issued and delivered, will be duly authorized, legally and validly issued, fully
paid and non-assessable and subject to no preemptive rights). The shares of UJB
Stock to be issued in accordance with this Agreement are sometimes referred to
herein as the "Shares". Upon the terms, and subject to the conditions of this
Agreement, including the conversion of Summit Common according to the Exchange
Ratio, UJB shall issue the Shares upon consummation of the Merger to holders of
Summit Stock.
Section 1.05. Exchange Agent Arrangements. Prior to the Effective Time,
UJB shall appoint First Chicago Trust Company of New York, or another entity
reasonably satisfactory to Summit, as the exchange agent ("Exchange Agent")
responsible for exchanging, in connection with and upon consummation of the
Merger and subject to Sections 1.03 and 1.08, certificates representing whole
shares of UJB Common ("UJB Common Certificates") and cash in lieu of fractional
shares of UJB Common for certificates representing shares of Summit Common
("Summit Common Certificates") and certificates representing shares of UJB
Preferred ("UJB Preferred Certificates") for certificates representing shares of
Summit Preferred ("Summit Preferred Certificates") and, upon consummation of the
Merger, UJB shall deliver to the Exchange Agent sufficient UJB Common
Certificates and UJB Preferred Certificates (collectively, the "UJB
Certificates") and cash as shall be required to satisfy UJB's obligations to
holders of Summit Common hereunder with respect to fractional shares of UJB
Common.
Section 1.06. Effective Time. The Merger shall be effective at the hour
and on the date ("Effective Time") specified in the Certificate of Merger of UJB
and Summit required by this Agreement to be filed with the Secretary of State of
the State of New Jersey in accordance with Section 14A:10-4.1 of the New Jersey
Act ("Certificate of Merger"), but the Effective Time so specified shall not be
later than 12:01 a.m. on the day immediately following the day the Certificate
of Merger is filed. UJB shall file the Certificate of Merger as promptly as
practicable following the Closing (as defined at Section 9.01) but in no event
later than one business day following the Closing Date (as defined at Section
9.01).
Section 1.07. Exchange of Summit Certificates.
(a) After the Effective Time, each holder (except UJB to the extent
provided in Section 1.03(a)(1)(A) or 1.03(a)(2)(A)) of Summit Certificates, upon
surrender of such Summit
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Certificates to the Exchange Agent, shall be entitled to receive in exchange
therefor, as the case may be, a UJB Common Certificate representing the number
of whole shares of UJB Common such holder is entitled to receive pursuant to the
conversion effected by Section 1.03 and the terms of Section 1.08 and the cash
payment (by check) such holder may be entitled, pursuant to Section 1.08, to
receive in lieu of a fractional share of UJB Common, or a UJB Preferred
Certificate representing the number of shares of UJB Preferred such holder is
entitled to receive pursuant to Section 1.03. Until so surrendered, outstanding
Summit Certificates held by each holder of Summit Stock, other than Summit Stock
not converted pursuant to Section 1.03(a)(1)(A) or 1.03(a)(2)(A), shall be
deemed for all purposes, other than as provided below with respect to
unsurrendered Summit Certificates and UJB's right to refuse payment of dividends
or other distributions, if any, in respect of UJB Stock, to represent, as the
case may be, either the number of whole shares of UJB Common into which the
shares of Summit Common have been converted and the right to receive cash in
lieu of fractional shares of UJB Common, if any, as provided in Section 1.08, or
the number of shares of UJB Preferred into which the shares of Summit Preferred
have been converted. Until so surrendered, UJB may, at its option, refuse to pay
to the holders of Summit Certificates dividends or other distributions, if any,
payable to holders of UJB Stock; provided, however, that upon surrender and
exchange of Summit Certificates there shall be paid to such holders the amount,
without interest, of dividends and other distributions, if any, which became
payable prior thereto but which were not paid.
(b) Holders of Summit Certificates as of the Effective Time shall cease
to be, and shall have no further rights as, shareholders of Summit.
(c) As promptly as practicable after the Effective Time UJB shall cause
the Exchange Agent to send to each holder of Summit Certificates instructions
and transmittal materials for use in surrendering and exchanging Summit
Certificates. If Summit Certificates are properly presented to the Exchange
Agent, UJB shall cause the Exchange Agent to cancel and exchange them for UJB
Certificates and, where appropriate, cash payments in lieu of fractional shares,
if any.
(d) At and after the Effective Time there shall be no transfers on the
stock transfer books of Summit of the shares of Summit Stock which were
outstanding immediately prior to the Effective Time.
Section 1.08. Fractional Shares. All Summit Common held in the
aggregate by each Summit shareholder shall be multiplied by the Exchange Ratio
to determine the number of shares of UJB Common each such Summit shareholder is
entitled to receive in the Merger. Each Summit shareholder shall be entitled to
receive a UJB Common Certificate for the number of whole shares of UJB Common
resulting from such multiplication. Each Summit shareholder shall be entitled to
receive cash in lieu of any fractional share of UJB Common resulting from such
multiplication in an amount ("Cash In Lieu Amount") determined by multiplying
the fractional share interest to which such holder would otherwise be entitled
by the UJB Common Price on the last business day preceding the Effective Time.
The "UJB Common Price" shall mean the closing price of one
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share of UJB Common on the New York Stock Exchange--Composite Transactions List
(as reported in The Wall Street Journal or, in the absence thereof, by any other
authoritative source). The Shares and any Cash In Lieu Amounts payable in the
Merger are sometimes collectively referred to herein as the "Merger
Consideration".
Section 1.09. Restated Certificate of Incorporation and By-Laws. The
Restated Certificate of Incorporation of UJB in force immediately prior to the
Effective Time, amended to provide for the name of the Surviving Corporation to
be "Summit Bank Corp.", or, if not permissible in any relevant jurisdiction,
"Summit Bancorporation", and amended further to provide for a class of Preferred
Stock designated the "$25 stated value Adjustable Rate Cumulative Preferred
Stock" and having relative rights, preferences and limitations identical to
those of the Summit Preferred, shall be the Restated Certificate of
Incorporation of the Surviving Corporation, except as duly amended thereafter
and except to the extent such is affected by the Certificate of Merger. In
addition to the Certificate of Merger required to be filed by UJB pursuant to
Section 1.06, UJB shall file as an additional document together with the
Certificate of Merger a Restated Certificate of Incorporation containing the
provisions of UJB's Restated Certificate of Incorporation in effect on the date
hereof amended as provided in the first sentence of this Section 1.09. The
By-Laws of UJB in force immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation, except as duly amended thereafter.
Section 1.10. Board of Directors and Officers.
(a) The UJB Board of Directors shall take or cause to be taken all
action necessary to cause the directors comprising the full Board of Directors
of UJB at the Effective Time to include six persons designated prior to the
Effective Time by the Board of Directors of Summit from among those persons
serving as Summit directors on the date hereof and who continue to serve as
Summit directors through the Effective Time (the "Summit Designees"). UJB shall
take all action necessary to provide that the term of two of the Summit
Designees as a director of UJB shall expire at the first annual meeting of UJB
shareholders held after the Effective Time, and to provide that the remaining
four Summit Designees be divided evenly between the other two classes of
directors. One of the Summit Designees shall be, so long as he is able to serve,
Robert G. Cox, who shall be designated to the class of director whose term
expires at the third annual meeting of UJB shareholders held after the Effective
Time. Subject to the provisions of UJB's Restated Certificate of Incorporation
and By-Laws regarding director qualifications, all Summit Designees shall be
nominated to serve at least one full term of three years in the class of
Directors to which they are initially elected by the Board of Directors of UJB.
UJB agrees not to increase the number of directors above the 13 directorships
existing on the date hereof but Summit agrees UJB may fill any vacancies
occurring prior to the Effective Time. If required by the New Jersey Act, all
six Summit Designees shall stand for reelection as UJB directors, subject to the
provisions of UJB's Restated Certificate of Incorporation then in effect, at the
first annual meeting of UJB shareholders held after the Effective Time.
(b) The President of the Surviving Corporation shall be the person who
on the date
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Exhibit 1
hereof is serving as the President of Summit, provided such person is serving in
such capacity immediately prior to the Effective Time, and the remaining
officers of the Surviving Corporation shall consist of the officers of UJB
immediately prior to the Effective Time plus such other persons serving as
officers of Summit immediately prior to the Effective Time as UJB and Summit
shall mutually designate.
(c) The directors and officers of the Surviving Corporation provided
for in this Section 1.10 shall serve as such for the terms prescribed in the
Restated Certificate of Incorporation and By-Laws of UJB, or otherwise as
provided by law or until their earlier deaths, resignation or removal.
Section 1.11. Summit Stock Incentive and Stock Option Plans. At the
Effective Time, each stock option relating to Summit Common ("Summit Options")
outstanding on the date hereof pursuant to the Summit Stock Incentive Plan, the
Summit 1995 Stock Incentive Plan and the Summit 1995 Director Stock Option Plan
("Summit Stock Award Plans") shall be deemed to constitute, and shall
automatically be converted in accordance with the Exchange Ratio into, stock
options relating to UJB Stock ("UJB Options") and each UJB Option shall be
administered in accordance with the terms and conditions provided for in the
Summit Stock Award Plan under which the corresponding Summit Option was granted
and the stock option agreement by which it was evidenced, including terms and
provisions regarding exercisability. The number of shares of UJB Stock covered
by each UJB Option shall be the number of shares of UJB Stock which would have
been issued in the Merger if the shares of Summit Stock subject to the
corresponding Summit Option were issued and outstanding immediately prior to the
Effective Time; provided, however, that the number of shares of UJB Stock that
may be purchased upon exercise of a UJB Option shall not include any fractional
share interest but shall be rounded down to the next lower full share. The
exercise price per share of UJB Stock subject to a UJB Option shall equal the
exercise price per share of Summit Stock subject to the corresponding Summit
Option so converted divided by the Exchange Ratio (subject to any adjustments
provided for in this Agreement). In addition, holders of exercisable UJB Options
shall be permitted during such time as the UJB Option is exercisable, in lieu of
purchasing the UJB Common subject to the UJB Option, to elect to receive the
number of shares of UJB Common (rounded down to the nearest whole share) equal
in market value to the amount obtained by multiplying (a) times (b), where (a)
is the difference obtained by subtracting the exercise price of the underlying
UJB Option from the market value of a share of UJB Common on the date the
election is made, and (b) is the number of shares of UJB Common with respect to
which the election has been made. For purposes of the foregoing sentence, the
market value of a share of UJB Common shall be the average of the high and low
sales prices of a share of UJB Common as reported on the New York Stock
Exchange--Composite Transactions List (by The Wall Street Journal or, in the
event of its unavailability, by any other authoritative source) on the date the
election is made. As soon as practicable after the Effective Time, UJB shall
issue to the holders of such Summit Options appropriate instruments confirming
the rights of such holders with respect to UJB Stock, on the terms and
conditions provided by this Section 1.11, upon surrender of the outstanding
instruments representing such Summit Options; provided, however, that UJB shall
not be obligated to issue any such confirming
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instruments which relate to the issuance of UJB Stock, or issue any shares of
UJB Stock, until such time as the shares of UJB Stock issuable upon exercise of
UJB Options shall have been registered with the Securities and Exchange
Commission (the "SEC") pursuant to an effective registration statement and
authorized for listing on the New York Stock Exchange and for sale by any
appropriate state securities regulators, which UJB shall use its best efforts to
effect as promptly as practicable, but in no event more than 30 days, after the
Effective Time. UJB shall use its best efforts to maintain the effectiveness of
such registration statement (and maintain the current status of the prospectus
or prospectuses contained therein) for so long as the UJB Options remain
outstanding. At or prior to the Effective Time, UJB shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of UJB
Common for delivery upon exercise of UJB Options.
Section 1.12. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Summit acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of Summit or otherwise, all such deeds, bills of sale, assignments
and assurances and to take, in the name and on behalf of Summit, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.13. Unclaimed Merger Consideration. If, upon the expiration
of one year following the Effective Time, Merger Consideration remains with the
Exchange Agent due to the failure of Summit Shareholders to surrender and
exchange Summit Certificates for Merger Consideration, UJB may, at its election,
continue to retain the Exchange Agent for purposes of the surrender and exchange
of Summit Certificates or take possession of such unclaimed Merger
Consideration, in which such latter case, Summit Shareholders who have
theretofore failed to surrender and exchange Summit Certificates shall
thereafter look only to UJB for payment of the Merger Consideration and the
unpaid dividends and distributions on the UJB Stock constituting some or all of
the Merger Consideration, without any interest thereon. Notwithstanding the
foregoing, none of UJB, Summit, the Exchange Agent or any other person shall be
liable to any former holder of shares of Summit Stock for any property properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
Section 1.14. Lost Summit Certificates. In the event any Summit
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Summit Certificate to be
lost, stolen or destroyed and, if required by UJB, the posting by such person of
a bond in such amount as UJB may determine is reasonably necessary as indemnity
against any claim that may be made against it with respect to such Summit
Certificate, the Exchange Agent will
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Exhibit 1
issue in exchange for such lost, stolen or destroyed Summit Certificate the
Merger Consideration deliverable in respect thereof pursuant to this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to UJB as follows:
Section 2.01. Organization, Capital Stock.
(a) Each of Summit and its nonbank subsidiaries, including the nonbank
subsidiaries of bank subsidiaries (the term "subsidiary", as used in this
Agreement, shall mean any corporation or other organization of which 25% or more
of the shares or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or other group performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned), all of which are listed, together with their respective
states of incorporation, on Summit Schedule 2.01(a), is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, qualified to transact business in and in good standing under
the laws of all jurisdictions where the failure to be so qualified would be
likely to have a material adverse effect on (i) the business, results of
operations, assets or financial condition of Summit and its subsidiaries on a
consolidated basis, or (ii) the ability of Summit to perform its obligations
under, and to consummate the transactions contemplated by, this Agreement (a
"Summit Material Adverse Change"). However, a Summit Material Adverse Change
will not include a change resulting from a change in law, rule, regulation or
generally accepted or regulatory accounting principles, or from any other matter
affecting banking institutions or their holding companies generally. Each of
Summit and its subsidiaries has all corporate power and authority and all
material licenses, franchises, certificates, permits and other governmental
authorizations which are legally required to own and lease its properties, to
occupy its premises and to engage in its business and activities as presently
engaged in, and each has complied in all material respects with all applicable
laws, regulations and orders.
(b) Summit is registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "Bank Holding Company Act").
(c) Summit or one of its subsidiaries is the holder and beneficial
owner of all of the outstanding capital stock of all of Summit's direct and
indirect nonbank subsidiaries.
(d) (1) The authorized capital stock of Summit consists of 50,000,000
shares of Common Stock, each of no par value, and 12,000,000 shares, each of no
par value, of Preferred Stock, and as of the date hereof:
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(A) 33,820,043 shares of Summit Common are outstanding,
33,904,528 shares of Summit Common are issued, and 504,000 shares of
Summit Preferred are outstanding,
(B) 7,793,505 shares of Summit Common are reserved for
issuance pursuant to the Employee Stock Purchase Plan of Summit dated
March 21, 1989, the Summit Stock Award Plans, Summit's obligations
under the Crestmont Financial Corp. Stock Compensation Plan (the
"Crestmont Plan") and the Summit Dividend Reinvestment and Stock
Purchase Plan (collectively, the "Summit Stock Plans") and pursuant to
Summit's obligations under the Agreement and Plan of Merger between
Summit and Garden State Bancshares, Inc. dated June 14, 1995 (the
"Garden State Agreement"). No other shares of Summit Common are
reserved for issuance;
(C) 250,000 shares of Series B Junior Participating Preferred
Stock, no par value (the "Summit Series B Preferred Stock"), are
reserved for issuance in connection with the Summit Rights Agreement,
dated as of January 16, 1990, as amended (the "Summit Rights
Agreement"). No other shares of Summit Preferred Stock are reserved for
issuance; and
(D) 84,485 shares of Summit Common are held by Summit in its
treasury as issued but not outstanding or canceled Summit Common.
(2) All issued shares of the capital stock of Summit and of each
of its nonbank subsidiaries have been fully paid, were duly authorized and
validly issued, are non-assessable and have been issued pursuant to an effective
registration statement and current prospectus under the Securities Act of 1933
(the "Securities Act") or an appropriate exemption from registration under the
Securities Act and were not issued in violation of the preemptive rights of any
shareholder.
(3) Except as set forth above in this Section 2.01(d) or in Section
2.01(a), except for director and employee stock options outstanding under the
Summit Stock Award Plans, except for Summit Common issuable in connection with
the Summit Stock Plans and the Garden State Agreement, and except for the Summit
Series B Preferred Stock issuable in connection with the Summit Rights
Agreement, there are no other Equity Securities of Summit or any subsidiary of
Summit outstanding, in existence, the subject of an agreement or reserved for
issuance.
(4) "Equity Securities" of an issuer means capital stock or other
equity securities of such issuer, options, warrants, scrip, rights to subscribe
to, call or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any capital stock or other Equity
Securities of such issuer, or contracts, commitments, understandings or
arrangements by which such issuer is or may become bound to issue additional
shares of its capital stock or other Equity Securities of such issuer, or
options, warrants, scrip or rights to purchase, acquire, subscribe to, calls on
or commitments for any shares of its capital stock or other Equity Securities.
(5) All plans of Summit for the granting of stock options, stock
appreciation rights or other securities or derivative securities to directors or
employees, and any amendments thereto,
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Exhibit 1
have been duly approved by the shareholders of Summit in accordance with the
shareholder approval requirements of the Code and Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"). All such plans are set
forth on Summit Schedule 2.01(d) as well as all material information in the
aggregate relating to outstanding awards thereunder, including director and
employee stock options (including without limitation date of grant, exercise
price, number of shares, whether incentive or nonqualified under the Code, any
noncustomary terms or provisions), dividend units (including without limitation
units outstanding, payment amounts or rates, accruals), performance share units
(including without limitation units outstanding, performance goals, payment
amounts or rates) and unvested restricted stock.
(e) Summit owns no bank subsidiary other than Summit Bank
("Bank")("bank" is hereby defined to include commercial banks, savings banks,
private banks, trust companies, savings and loan associations, building and loan
associations and similar institutions receiving deposits and making loans). Bank
is a bank duly organized, validly existing, and in good standing under the laws
of the State of New Jersey. Bank is duly authorized to conduct all activities
and exercise all powers contemplated by applicable laws of the State of New
Jersey, is an insured bank as defined in the Federal Deposit Insurance Act, and
has all corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease its properties and assets, to occupy its premises, and
to engage in its business and activities as presently engaged in, and has
complied in all material respects with all applicable laws, regulations and
orders.
(f) The authorized and outstanding capital stock of Bank is as set
forth on Summit Schedule 2.01(f). Summit is the holder and beneficial owner of
all shares of the issued and outstanding capital stock of Bank. All issued and
outstanding shares of the capital stock of Bank have been fully paid, were duly
authorized and validly issued, are non-assessable, and were not issued in
violation of the preemptive rights of any shareholder. No options covering the
capital stock of Bank, warrants to purchase or contracts to issue capital stock
of Bank, or any other contracts, presently exercisable rights (including
preemptive rights), commitments or convertible securities entitling anyone to
acquire from Summit or any of its subsidiaries or obligating them to issue any
capital stock, or securities convertible into or exchangeable for shares of
capital stock, of Bank are outstanding, in existence, or the subject of an
agreement except for the Garden State Agreement.
(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Summit or a subsidiary of Summit are held free and clear
of any claims, liens, encumbrances or security interests.
Section 2.02. Financial Statements. The financial statements and
schedules contained or incorporated in (a) Summit's annual report to
shareholders for the fiscal year ended December 31, 1994, (b) Summit's annual
report on Form 10-K pursuant to the Exchange Act for the fiscal year ended
December 31, 1994, (c) Summit's quarterly reports on Form 10-Q pursuant to the
Exchange Act for the fiscal quarters ended March 31, 1995 and June 30, 1995, and
(d) Bank's regulatory call reports in 1995 (the "Summit Financial Statements")
are true and correct in all
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material respects as of their respective dates and each fairly presents
(subject, in the case of unaudited statements, to recurring audit adjustments
normal in nature and amount), in accordance with generally accepted accounting
principles in the case of the reports listed in clauses (a), (b) and (c), and in
accordance with regulatory accounting principles in the case of the reports
listed in clause (d), the consolidated statements of condition, income, changes
in stockholders' equity and cash flows of Summit and its subsidiaries at its
respective date and for the period to which it relates. Except as may otherwise
be described therein or in related notes or in the accountants' reports thereon,
the Summit Financial Statements were prepared in accordance with generally
accepted accounting principles in the case of the reports listed in clauses (a),
(b) and (c), and in accordance with regulatory accounting principles in the case
of the reports listed in clause (d). The Summit Financial Statements do not, as
of the dates thereof, include any material asset or omit any material liability,
absolute or contingent, or other fact, the inclusion or omission of which
renders the Summit Financial Statements, in light of the circumstances under
which they were made, misleading in any respect.
Section 2.03. No Conflicts. Summit and each of its subsidiaries is not
in, and has received no notice of, violation or breach of, or default under, nor
will the execution, delivery and performance of this Agreement by Summit, or the
consummation of the transactions contemplated hereby including the Merger by
Summit upon the terms provided herein (assuming receipt of the Required
Consents, as that term is defined in Section 4.01), violate, conflict with,
result in the breach of, constitute a default under, give rise to a claim or
right of termination, cancellation, revocation of, or acceleration under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the material rights, permits, licenses, assets or properties of Summit or any
of its subsidiaries or upon any of the Equity Securities of Summit or any of its
subsidiaries, or constitute an event which could, with the lapse of time, action
or inaction by Summit or any of its subsidiaries or a third party, or the giving
of notice and failure to cure, result in any of the foregoing, under any of the
terms, conditions or provisions, as the case may be, of:
(a) the Certificate of Incorporation or the By-Laws of Summit or any of
its subsidiaries;
(b) any applicable law, statute, rule, ruling, determination, ordinance
or regulation of or agreement with any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction or decree of any court
or other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement or other instrument;
to which Summit or any of its subsidiaries is a party or by which Summit or any
of its subsidiaries or any of their assets or properties are bound or committed,
the consequences of which
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individually or in the aggregate would be likely to result in a Summit Material
Adverse Change, or enable any person to enjoin the transactions contemplated
hereby.
Section 2.04. Absence of Undisclosed Liabilities. To the best knowledge
of Summit management, Summit and its subsidiaries have no liabilities, whether
contingent or absolute, direct or indirect, matured or unmatured (including but
not limited to liabilities for federal, state and local taxes, penalties,
assessments, lawsuits or claims against Summit or any of its subsidiaries), and
no loss contingency (as defined in Statement of Financial Accounting Standards
No. 5), other than (a) those reflected in the Summit Financial Statements or
disclosed in the notes thereto, (b) commitments made by Summit or any of its
subsidiaries in the ordinary course of its business which are not in the
aggregate material in frequency or amount to Summit and its subsidiaries, taken
as a whole, and (c) liabilities arising in the ordinary course of its business
since December 31, 1994, which are not in the aggregate material in frequency or
amount to Summit and its subsidiaries, taken as a whole. Neither Summit nor any
of its subsidiaries has, since June 30, 1995, become obligated on any debt due
in more than one year from the date of this Agreement in excess of $10,000,000,
other than intra-corporate debt and deposits received, repurchase agreements and
borrowings from the Federal Reserve Bank of New York or the Federal Home Loan
Bank of New York entered into in the ordinary course of business.
Section 2.05. Absence of Litigation; Agreements with Bank Regulators.
There is no outstanding order, injunction or decree of any court or governmental
or self-regulatory body against or affecting Summit or its subsidiaries which
materially and adversely affects Summit and its subsidiaries, taken as a whole,
and there are no actions, arbitrations, claims, charges, suits, investigations
or proceedings (formal or informal) material to Summit and its subsidiaries,
taken as a whole, pending or, to Summit's knowledge, threatened, against or
involving Summit or any of its subsidiaries or their officers or directors (in
their capacity as such) in law or equity or before any court, panel or
governmental agency, except as disclosed in the Forms 10-K and 10-Q of Summit
referred to in Section 2.02 and in Summit Schedule 2.05. Neither Bank nor Summit
is a party to any agreement or memorandum of understanding with, or is a party
to any commitment letter to, or has submitted a board of directors resolution or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its business, or
in any manner relates to material statutory or regulatory noncompliance
discovered in any regulatory examinations, its capital adequacy, its credit or
reserve policies or its management. Neither Bank nor Summit has been advised by
any governmental or regulatory authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
of the foregoing. Neither Bank nor Summit has failed to resolve to the
satisfaction of the applicable regulatory agency any significant deficiencies
cited by any such agency in its most recent examinations of each aspect of
Bank's and Summit's business.
Section 2.06. Brokers' Fees. Summit has entered into this Agreement
with UJB as a result of direct negotiations without the assistance or efforts of
any finder, broker, financial advisor or investment banker, other than Keefe,
Bruyette & Woods, Inc. ("Keefe, Bruyette").
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Summit Schedule 2.06 consists of true and complete copies of all agreements
between Summit and Keefe, Bruyette with respect to the transactions contemplated
by this Agreement.
Section 2.07. Material Filings. At the time of filing, all filings made
by Summit and its subsidiaries after December 31, 1991 with the SEC and the
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. Summit has timely made all filings required by the Securities Act
and the Exchange Act and Bank has timely made all filings required by applicable
Federal and state banking laws.
Section 2.08. Corporate Action. Assuming due execution and delivery by
UJB, and subject to the requisite approval by the shareholders of Summit of this
Agreement, the Merger and the other transactions contemplated hereby in
accordance with Summit's Certificate of Incorporation and the New Jersey Act at
a meeting of such holders to be duly called and held, Summit has the corporate
power and is duly authorized by all necessary corporate action to execute,
deliver and perform this Agreement. The Board of Directors of Summit has taken
all action required by law, its Certificate of Incorporation, its By-Laws or
otherwise to authorize the execution and delivery of this Agreement. This
Agreement is a valid and binding agreement of Summit enforceable in accordance
with its terms except as such enforcement may be limited by applicable
principles of equity, and by bankruptcy, insolvency, fraudulent transfer,
moratorium or other similar laws of general applicability presently or hereafter
in effect affecting the enforcement of creditors' rights generally. The Board of
Directors of Summit in authorizing the execution of this Agreement has
determined, at the date of this Agreement, to recommend to the shareholders of
Summit the approval of this Agreement, the Merger and the other transactions
contemplated hereby.
Section 2.09. Absence of Changes. There has not been, since December
31, 1994, any Summit Material Adverse Change. Except as disclosed in Summit
Schedule 2.09, neither Summit nor any of its subsidiaries has, (a) since June
30, 1995: (i) declared, set aside or paid any dividend or other distribution in
respect of its capital stock, other than dividends from subsidiaries to Summit
or other subsidiaries of Summit and an ordinary cash dividend of $.21 per share,
or, directly or indirectly, purchased, redeemed or otherwise acquired any shares
of such stock held by persons other than Summit and its subsidiaries; (ii)
incurred material current liabilities since that date other than in the ordinary
course of business; (iii) sold, exchanged or otherwise disposed of any of their
assets except in the ordinary course of business; (iv) entered into any
transactions which in the aggregate exceeded $10,000,000 other than in the
ordinary course of business; or (v) acquired the assets or capital stock of
another company, except in a fiduciary capacity or in the course of securing or
collecting loans or leases and except pursuant to the Garden State Agreement,
and, (b) since the date of the most recent proxy statement made any officers'
salary increase or wage increase, entered into any employment, consulting,
severance or change of control contract with any present or former director,
officer or salaried employee, or instituted any employee or director welfare,
bonus, stock option, profit-sharing, retirement, severance or
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Exhibit 1
other benefit plan or arrangement or modified any of the foregoing so as to
increase its obligations thereunder in any material respect other than in the
ordinary course of business consistent with past practices.
Section 2.10. Allowance for Loan and Lease Losses. At June 30, 1995 and
thereafter the allowance for loan and lease losses of Summit and its
subsidiaries are adequate in all material respects to provide for all losses on
loans and leases outstanding and, to the best of Summit's knowledge, the loan
and lease portfolios of Summit in excess of such allowances are collectible in
the ordinary course of business.
Section 2.11. Taxes and Tax Returns. Neither Summit nor any of its
subsidiaries has at any time filed a consent pursuant to Section 341(f) of the
Code or consented to have the provisions of Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by Summit or any of its subsidiaries. None of the
property being acquired by UJB or its subsidiaries in the Merger is property
which UJB or its subsidiaries will be required to treat as being owned by any
other person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code. Proper and accurate amounts have
been withheld from employees by Summit and each of its subsidiaries for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state and local law.
Proper and accurate federal, state and local returns have been timely filed by
Summit and each of its subsidiaries for all periods for which returns were due,
including with respect to employee income tax withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full or adequate provision therefor has been included on the books
of Summit or its appropriate subsidiary. Neither Summit nor any of its
subsidiaries is required to file tax returns with any state other than the State
of New Jersey and the Commonwealth of Pennsylvania. Provision has been made on
the books of Summit or its appropriate subsidiary for all unpaid taxes, whether
or not disputed, that may become due and payable by Summit or any of its
subsidiaries in future periods in respect of transactions, sales or services
previously occurring or performed. The Internal Revenue Service ("IRS") has
audited the consolidated federal income tax returns of Summit for all taxable
years ended on or prior to December 31, 1993 and the State of New Jersey has
audited the New Jersey income tax returns of Summit and its subsidiaries for all
taxable years ended on or prior to December 31, 1993. Neither Summit nor any of
its subsidiaries is subject to an audit or review of its tax returns by any
state other than the State of New Jersey and the Commonwealth of Pennsylvania.
Summit is not and has not been a United States real property holding corporation
as defined in Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. Neither Summit nor any of its
subsidiaries is currently a party to any tax sharing or similar agreement with
any third party. There are no material matters, assessments, notices of
deficiency, demands for taxes, proceedings, audits or proposed deficiencies
pending or, to Summit's knowledge, threatened against Summit or any of its
subsidiaries and there have been no waivers of statutes of limitations or
agreements related to assessments or collection in respect of any
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federal, state or local taxes. Neither Summit nor any of its subsidiaries has
agreed to or is required to make any material adjustment pursuant to Section
481(a) of the Code by reason of a change in accounting method initiated by
Summit or any of its subsidiaries, and neither Summit nor any of its
subsidiaries has any knowledge that the IRS has proposed any such material
adjustment or change in accounting method. Summit and its subsidiaries have
complied in all material respects with all requirements relating to information
reporting and withholding (including back-up withholding) and other requirements
relating to the reporting of interest, dividends and other reportable payments
under the Code and state and local tax laws and the regulations promulgated
thereunder and other requirements relating to reporting under federal law
including record keeping and reporting on monetary instruments transactions.
Section 2.12. Properties. Summit, directly or through its subsidiaries,
has good and marketable title to all of its properties and assets, tangible and
intangible, including those reflected in the most recent consolidated balance
sheet included in the Summit Financial Statements (except individual properties
and assets disposed of since that date in the ordinary course of business),
which properties and assets are not subject to any mortgage, pledge, lien,
charge or encumbrance other than as reflected in the Summit Financial Statements
or which in the aggregate do not materially adversely affect or impair the
operation of Summit and its subsidiaries taken as a whole. Summit and each of
its subsidiaries enjoys peaceful and undisturbed possession under all material
leases under which it or any of its subsidiaries is the lessee, where the
failure to enjoy such peaceful and undisturbed possession would be likely to
have a material adverse effect on Summit and its subsidiaries taken as a whole.
Section 2.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by Summit or any of its subsidiaries or used by Summit
or any of its subsidiaries in its business are in a good state of maintenance
and repair, are in good operating condition, subject to normal wear and tear,
conform in all material respects to all applicable ordinances, regulations and
zoning laws, and are adequate for the business conducted by Summit or such
subsidiary subject to exceptions which are not, in the aggregate, material to
Summit and its subsidiaries, taken as a whole. Summit and each of its
subsidiaries maintains insurance (with companies which, to the best of Summit's
knowledge, are authorized to do business in New Jersey) against loss relating to
such properties in amounts which are customary, usual and prudent for
corporations or banks, as the case may be, of their size. Such policies are in
full force and effect and are disclosed on Summit Schedule 2.13.
Section 2.14. Contracts.
(a) Except as set forth in Summit Schedule 2.14(a), neither Summit nor
any of its subsidiaries is a party to and neither they nor any of their assets
are bound by any written or oral lease or license with respect to any property,
real or personal, as tenant or licensee involving an annual consideration in
excess of $1,000,000.
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(b) Except as set forth in Summit Schedule 2.14(b), neither Summit nor
any of its subsidiaries is a party to and neither they nor any of their assets
is bound by any written or oral: (i) employment or severance contract
(including, without limitation, any collective bargaining contract or union
agreement) which is not terminable without penalty by Summit or a subsidiary, as
appropriate, on 60 days' or less notice; (ii) contract or commitment for capital
expenditures in excess of $2,000,000 in the aggregate for any one project or in
excess of $20,000,000 in the aggregate for all projects; (iii) contract or
commitment whether or not made in the ordinary course of business for the
purchase of materials or supplies or for the performance of services involving
consideration in excess of $1,000,000 (including advertising and consulting
agreements, data processing agreements, and retainer agreements with attorneys,
accountants, actuaries, or other professionals); (iv) contract or option to
purchase or sell any real or personal property other than OREO property
involving consideration in excess of $2,000,000; or (v) other contracts material
to the business of Summit and its subsidiaries taken as a whole and not made in
the ordinary course of business.
(c) Neither Summit nor any of its subsidiaries is a party to or
otherwise bound by any contract, agreement, plan, lease, license, commitment or
undertaking which, in the reasonable opinion of management of Summit, is
materially adverse, onerous, or harmful to any aspect of the business of Summit
and its subsidiaries taken as a whole.
Section 2.15. Pension and Benefit Plans.
(a) Neither Summit nor any of its subsidiaries maintains an employee
pension benefit plan, within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or has made any
contributions to any such employee pension benefit plan, except employee pension
benefit plans listed in Summit Schedule 2.15(a) (individually a "Summit Plan"
and collectively the "Summit Plans"). In its present form each Summit Plan
complies in all material respects with all applicable requirements under ERISA
and the Code. Each Summit Plan and the trust created thereunder is qualified and
exempt under Sections 401(a) and 501(a) of the Code, and Summit or the
subsidiary whose employees are covered by such Summit Plan has received from the
IRS a determination letter to that effect. No event has occurred and to the
knowledge of Summit there has been no omission or failure to act which would
adversely affect such qualification or exemption. Each Summit Plan has been
administered and communicated to the participants and beneficiaries in all
material respects in accordance with its terms and ERISA. Except as disclosed in
Summit Schedule 2.15(a), no employee of Summit or any subsidiary whose employees
are covered by a Summit Plan has engaged in any action or, to the knowledge of
Summit, has failed to act in such manner that, as a result of such action or
failure, a participant or beneficiary or a nonparticipating employee has been
denied benefits properly due or to become due under such Summit Plan or has been
misled as to his or her rights under such Summit Plan. Except as disclosed in
Summit Schedule 2.15(a), no Summit Plan is subject to Section 412 of the Code or
Title IV of ERISA. No person has engaged in any prohibited transaction involving
any Summit Plan or associated trust within the meaning of Section 406 of ERISA
or Section 4975 of the Code. There are no pending or
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<PAGE> 17
threatened claims (other than routine claims for benefits) against the Summit
Plans or any fiduciary thereof which would subject Summit or any of its
subsidiaries to a material liability. All reports, filings, returns and
disclosures required to be made to the participants and beneficiaries, other
employees, the PBGC, the SEC, the IRS, the U.S. Department of Labor or any other
governmental agency pursuant to the Code, ERISA, or other applicable statute or
regulation have been made in a timely manner and all such reports, filings,
returns and disclosures were true and correct in all material respects. No
material liability has been, or is likely to be, incurred on account of
delinquent or incomplete compliance or failure to comply with such requirements.
Except as disclosed in Schedule 2.15(a), there are no unfunded benefit or
pension plans or arrangements, whether qualified or not, to which Summit or any
of its subsidiaries has any obligation to contribute. There has been no change
in control of any Summit Plan since the last effective date of any such change
of control disclosed to UJB in Schedule 2.15(a).
(b) All bonus, deferred compensation, profit-sharing, retirement,
pension, stock option, stock award and stock purchase plans and all other
employee benefit plans, including medical, major medical, disability, life
insurance or dental plans covering employees generally maintained by Summit or
any of its subsidiaries other than Summit Plans (collectively "Benefit Plans")
comply in all material respects with all applicable requirements imposed by the
Securities Act, the Exchange Act, ERISA, the Code, and all applicable rules and
regulations thereunder. Benefit Plans with an annual cost in excess of
$5,000,000 are listed on Summit Schedule 2.15(b). The Benefit Plans have been
administered and communicated to the participants and beneficiaries in all
material respects in accordance with their terms and ERISA, and no employee of
Summit or any of its subsidiaries has engaged in any action or, to the knowledge
of Summit, has failed to act in such manner that, as a result of such action or
failure, a participant or beneficiary or a nonparticipating employee has been
denied benefits properly due or to become due under the Benefit Plans or has
been misled as to their rights under the Benefit Plans. There are no pending or
threatened claims (other than routine claims for benefits) against the Benefit
Plans which would subject Summit or any of its subsidiaries to a material
liability. Any trust which is intended to be tax-exempt has received a
determination letter from the IRS to that effect and no event has occurred which
would adversely affect such exemption. All reports, filings, returns and
disclosures required to be made to the participants and beneficiaries, other
employees of Summit or any of its subsidiaries, the PBGC, the SEC, the IRS, the
U.S. Department of Labor and any other governmental agency pursuant to the Code,
ERISA, or other applicable statute or regulation, if any, have been made in a
timely manner and all such reports, filings, returns and disclosures were true
and correct in all material respects. No material liability has been, or is
likely to be, incurred on account of delinquent or incomplete compliance or
failure to comply with such requirements.
Section 2.16. Fidelity Bonds. Since at least January 1, 1989, Summit
and each of its subsidiaries has continuously maintained fidelity bonds insuring
them against acts of dishonesty in such amounts as are customary, usual and
prudent for organizations of its size and business. Neither Summit nor any of
its subsidiaries is aware of any facts which would form the basis of a claim or
claims under such bonds aggregating in excess of the applicable deductible
amounts
17
<PAGE> 18
Exhibit 1
under such bonds. Neither Summit nor any of its subsidiaries has reason to
believe that its respective fidelity coverage will not be renewed by its carrier
on substantially the same terms as the existing coverage, except for possible
premium increases unrelated to Summit's and its subsidiaries' past claim
experience.
Section 2.17. Labor Matters. To the knowledge of Summit, hours worked
by and payment made to employees of Summit and each of its subsidiaries have not
been in violation of the Fair Labor Standards Act or any applicable law dealing
with such matters; and all payments due from Summit and each of its subsidiaries
on account of employee health and welfare insurance have been paid or accrued as
a liability on the books of Summit or its appropriate subsidiary except for any
immaterial noncompliance. Summit is in compliance with all other laws and
regulations relating to the employment of labor, including all such laws and
regulations relating to collective bargaining, discrimination, civil rights,
safety and health, plant closing (including the Worker Adjustment Retraining and
Notification Act), workers' compensation and the collection and payment of
withholding and Social Security and similar taxes, except for any immaterial
noncompliance. No labor dispute, strike or other work stoppage has occurred and
is continuing or is threatened with respect to Summit or any of its
subsidiaries. To the knowledge of Summit, no employee of Summit or any of its
subsidiaries has been terminated, suspended, disciplined or dismissed under
circumstances that are likely to result in a material liability. No employees of
Summit or any of its subsidiaries are unionized nor has such union
representation been requested by any group of employees or any other person
within the last two years. There are no organizing activities involving Summit
pending with, or, to the knowledge of Summit, threatened by, any labor
organization or group of employees of Summit.
Section 2.18. Books and Records. The minute books of Summit and each of
its subsidiaries contain complete and accurate records of and fairly reflect all
actions taken at all meetings and accurately reflect all other corporate action
of the shareholders and the boards of directors and each committee thereof. The
books and records of Summit and each of its subsidiaries fairly and accurately
reflect the transactions to which Summit and each of its subsidiaries is or has
been a party or by which their properties are subject or bound, and such books
and records have been properly kept and maintained.
Section 2.19. Concentrations of Credit. No customer or affiliated group
of customers (i) is owed by Summit or any subsidiary of Summit an aggregate
amount equal to more than 10% of the shareholders' equity of Summit or such
subsidiary (including deposits, other debts and contingent liabilities) or (ii)
owes to Summit or any of its subsidiaries an aggregate amount equal to more than
10% of the shareholders' equity of Summit or such subsidiary (including loans
and other debts, guarantees of debts of third parties, and other contingent
liabilities).
Section 2.20. Trademarks and Copyrights. Neither Summit nor any of its
subsidiaries has received notice or otherwise knows that the manner in which
Summit or any of its subsidiaries conducts its business including its current
use of any material trademark, trade name, service mark
18
<PAGE> 19
or copyright violates asserted rights of others in any trademark, trade name,
service mark, copyright or other proprietary right.
Section 2.21. Environmental Matters.
(a) Except as disclosed in the Forms 10-K and 10-Q of Summit referred
to in Section 2.02 hereof, to the knowledge of Summit:
(1) No Hazardous Substances (as hereinafter defined) have been stored,
treated, dumped, spilled, disposed, discharged, released or deposited
at, under or on (1) any property now owned, occupied, leased or held or
managed in a representative or fiduciary capacity ("Present Property")
by Summit or any of its subsidiaries, (2) any property previously
owned, occupied, leased or held or managed in a representative or
fiduciary capacity ("Former Property") by Summit or any of its
subsidiaries during the time of such previous ownership, occupancy,
lease; holding or management or (3) any Participation Facility (as
hereinafter defined) during the time that Summit or any of its
subsidiaries participated in the management of, or may be deemed to be
or to have been an owner or operator of, such Participation Facility,
where such storage, treatment, dumping, spilling, disposing,
discharging, releasing or depositing would have a material adverse
effect on Summit and its subsidiaries, taken as a whole;
(2) Neither Summit nor any of its subsidiaries has disposed of, or
arranged for the disposal of, Hazardous Substances from any Present
Property, Former Property or Participation Facility, and no owner or
operator of a Participation Facility disposed of, or arranged for the
disposal of, Hazardous Substances from a Participation Facility during
the time that Summit or any of its subsidiaries participated in the
management of, or may be deemed to be or to have been an owner or
operator of, such Participation Facility, where such disposal or
arranging for disposal would have a material adverse effect on Summit
and its subsidiaries, taken as a whole;
(3) No Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan
Property (as hereinafter defined), where such storage, treatment,
dumping, spilling, disposing, discharging, releasing, depositing or
violation would have a material adverse effect on Summit and its
subsidiaries, taken as a whole, nor is there, with respect to any such
Loan Property, any violation of environmental law which could
materially adversely affect the value of such Loan Property to an
extent which could prevent or delay Summit or any of its subsidiaries
from recovering the full value of its loan in the event of a
foreclosure on such Loan Property.
(b) Neither Summit nor any subsidiary (i) is aware of any
investigations contemplated, pending or completed by any environmental
regulatory authority with respect to any
19
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Present Property, Former Property, Loan Property or Participation Facility, (ii)
has received any information requests from any environmental regulatory
authority, or (iii) been named as a potentially responsible or liable party in
any Superfund, Resource Conservation and Recovery Act, Toxic Substances Control
Act or Clean Water Act proceeding or other equivalent state or federal
proceeding.
(c) As used in this Agreement, (a) "Participation Facility" shall mean
any property or facility of which the relevant person or entity (i) has at any
time participated in the management or (ii) may be deemed to be or to have been
an owner or operator, (b) "Loan Property" shall mean any real property in which
the relevant person or entity holds a security interest in an amount greater
than $50,000 and (c) "Hazardous Substances" shall mean (i) any flammable
substances, explosives, radioactive materials, hazardous materials, hazardous
substances, hazardous wastes, toxic substances, pollutants, contaminants and any
related materials or substances specified in any applicable Federal or state law
or regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient or indoor air, surface
water, groundwater, land surface or subsurface strata) and (ii) friable
asbestos, polychlorinated biphenyls, urea formaldehyde, and petroleum and
petroleum-containing products and wastes.
Section 2.22 Accounting, Tax and Regulatory Matters. Neither Summit nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-interests accounting
treatment or (B) as a reorganization within the meaning of Section 368 of the
Internal Revenue Code or (ii) materially impede or delay receipt of any approval
referred to in Section 4.01 or the consummation of the transactions contemplated
by this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF UJB
UJB represents and warrants to Summit as follows:
Section 3.01. Organization; Capital Stock.
(a) UJB is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey with authorized capital stock
consisting of 130,000,000 shares of Common Stock, each of par value $1.20, of
which, as of the date hereof, 57,561,452 shares were outstanding and 8,638,483
shares were reserved for issuance pursuant to the employee stock option and
performance stock plans of UJB, UJB's Dividend Reinvestment and Stock Purchase
Plan, UJB's Savings Incentive Plan and UJB's obligations under the Agreement and
Plan of Merger dated August 1, 1995 between UJB and The Flemington National Bank
and Trust Company (the "Flemington Agreement"), and 4,000,000 shares of
Preferred Stock, each without
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<PAGE> 21
Exhibit 1
par value, of which 600,166 shares of Series B Adjustable Rate Cumulative
Preferred Stock ($50 stated value) were outstanding and 600,000 shares of Series
R Preferred Stock were reserved for issuance pursuant to UJB's Shareholder
Rights Plan. All outstanding shares of UJB's capital stock have been fully paid,
were duly and validly issued, and are non-assessable.
(b) UJB is qualified to transact business in and is in good standing
under the laws of all jurisdictions where the failure to be so qualified would
have a material adverse effect on (i) the business, results of operations,
assets or financial condition of UJB and its subsidiaries on a consolidated
basis or (ii) the ability of UJB to perform its obligations under, and to
consummate the transactions contemplated by this Agreement (a "UJB Material
Adverse Change"). However, a UJB Material Adverse Change will not include a
change resulting from a change in law, rule, regulation or generally accepted or
regulatory accounting principles, or from any other matter affecting banking
institutions or their holding companies generally. The bank subsidiaries of UJB
are duly organized, validly existing and in good standing under the laws of
their jurisdiction of organization. UJB and its bank subsidiaries have all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease their respective properties, occupy their respective
premises, and to engage in their respective businesses and activities as
presently engaged in. UJB is duly registered as a bank holding company under the
Bank Holding Company Act.
(c) All issued shares of the capital stock of UJB and of each of its
bank subsidiaries have been fully paid, were duly authorized and validly issued,
are non-assessable, have been issued pursuant to an effective registration
statement and current prospectus under the Securities Act or an appropriate
exemption from registration under the Securities Act and were not issued in
violation of the preemptive rights of any shareholder. UJB or one of its
subsidiaries is the holder and beneficial owner of all of the outstanding
capital stock of its bank subsidiaries. No options covering capital stock of UJB
(excluding board of trade and exchange traded standardized options) or any of
its bank subsidiaries, warrants to purchase or contracts to issue capital stock
of UJB or any of its bank subsidiaries, or any other contracts, presently
exercisable rights (including preemptive rights), commitments or convertible
securities entitling anyone to acquire from UJB or any of its subsidiaries or
obligating them to issue any capital stock, or securities convertible into or
exchangeable for shares of capital stock, of UJB or any of its bank subsidiaries
are outstanding, in existence, or the subject of an agreement, except for
employee stock options granted under stock option plans of UJB, UJB Stock
issuable pursuant to UJB's Dividend Reinvestment and Stock Purchase Plan, UJB
Savings Incentive Plan, 1993 Incentive Stock and Option Plan, the Flemington
Agreement and employee stock options outstanding on the date hereof, Series
R Preferred Stock issuable pursuant to the UJB Shareholder Rights Plan and
capital stock of United Jersey Bank ("UJ Bank") issuable in connection with
the merger of New Jersey Savings Bank into UJ Bank and in connection with the
merger contemplated by the Flemington Agreement.
Section 3.02. Financial Statements. The financial statements and
schedules contained or incorporated in UJB's (a) annual report to shareholders
for the fiscal year ended December 31, 1994, (b) annual report on Form 10-K
pursuant to the Exchange Act for the fiscal year ended December 31, 1994, (c)
quarterly reports on Form 10-Q pursuant to the Exchange Act for the fiscal
quarters ended March 31, 1994 and June 30, 1994, and (d) news release, Second
Quarter
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<PAGE> 22
Report to shareholders and bank regulatory call report relating to financial
results for the fiscal quarter ended June 30, 1995 (the "UJB Financial
Statements") are true and correct in all material respects as of their
respective dates and each fairly presents (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount), in
accordance with generally accepted accounting principles (except for regulatory
accounting principles in the case of the bank regulatory call report), the
consolidated balance sheets, statements of income, statements of shareholders'
equity and statements of cash flows of UJB and its subsidiaries at its
respective date and for the period to which it relates. Except as may otherwise
be described therein or in the related notes or in the accountants' reports
thereon, the UJB Financial Statements were prepared in accordance with generally
accepted accounting principles (except for regulatory accounting principles in
the case of the bank regulatory call report) consistently applied. The UJB
Financial Statements do not, as of the dates thereof, include any material asset
or omit any material liability, absolute or contingent, or other fact, the
inclusion or omission of which renders the UJB Financial Statements, in light of
the circumstances under which they were made, misleading in any respect.
Section 3.03. No Conflicts. UJB and each of it bank subsidiaries is not
in, and has received no notice of, violation or breach of, or default under, nor
will the execution, delivery and performance of this Agreement by UJB, or the
consummation of the Merger by UJB upon the terms and conditions provided herein
(assuming receipt of the Required Consents), violate, conflict with, result in
the breach of, constitute a default under, give rise to a claim or right of
termination, cancellation, revocation of, or acceleration under, or result in
the creation or imposition of any lien, charge or encumbrance upon any rights,
permits, licenses, assets or properties material to UJB and its subsidiaries,
taken as a whole, or upon any of the capital stock of UJB, or constitute an
event which could, with the lapse of time, action or inaction by UJB or a third
party, or the giving of notice and failure to cure, result in any of the
foregoing, under any of the terms, conditions or provisions, as the case may be,
of:
(a) the Restated Certificate of Incorporation or the By-Laws of UJB;
(b) any applicable law, statute, rule, ruling, determination,
ordinance, or regulation of any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction, or decree of any
court or other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement, or other instrument;
to which UJB is a party or by which UJB or any of its assets or properties are
bound or committed, the consequences of which individually or in the aggregate
would be a UJB Material Adverse Change, or enable any person to enjoin the
transactions contemplated hereby.
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Section 3.04. Absence of Undisclosed Liabilities. To the best knowledge
of UJB management, UJB and its subsidiaries have no liabilities, whether
contingent or absolute, direct or indirect, matured or unmatured (including but
not limited to liabilities for federal, state and local taxes, penalties,
assessments, lawsuits or claims against UJB or any of its subsidiaries), and no
loss contingency (as defined in Statement of Financial Accounting Standards No.
5), material in the aggregate to UJB and its subsidiaries, taken as a whole,
other than (a) those reflected in the UJB Financial Statements or disclosed in
the notes thereto, (b) commitments made by UJB or any of its subsidiaries in the
ordinary course of its business which are not in the aggregate material in
frequency or amount to UJB and its subsidiaries, taken as a whole, and (c)
liabilities arising in the ordinary course of its business since December 31,
1994 which are not in the aggregate material in frequency or amount to UJB and
its subsidiaries, taken as a whole.
Section 3.05. Absence of Litigation; Agreements with Bank Regulators.
There is no outstanding order, injunction, or decree of any court or
governmental or self-regulatory body against or affecting UJB or its
subsidiaries which materially and adversely affects UJB and its subsidiaries,
taken as a whole, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to UJB and
its subsidiaries, taken as a whole, pending or, to UJB's knowledge, threatened,
against or involving UJB or their officers or directors (in their capacity as
such) in law or equity or before any court, panel or governmental agency, except
as disclosed in the Forms 10-K and 10-Q of UJB referred to in Section 3.02.
Neither UJB nor any bank subsidiary of UJB is a party to any agreement or
memorandum of understanding with, or is a party to any commitment letter to, or
has submitted a board of directors resolution or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any governmental or regulatory authority which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies or its management. Neither
UJB nor any bank subsidiary of UJB, has been advised by any governmental or
regulatory authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any of the foregoing.
UJB and the bank subsidiaries of UJB have resolved to the satisfaction of the
applicable regulatory agency any significant deficiencies cited by any such
agency in its most recent examinations of each aspect of UJB or such bank
subsidiary's business except for any examinations received within 30 days of the
date hereof.
Section 3.06. Brokers' Fees. UJB has entered into this Agreement with
Summit as a result of direct negotiations without the assistance or efforts of
any finder, broker, financial advisor or investment banker, other than Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") UJB Schedule 3.06
consists of true and complete copies of all agreements between UJB and Merrill
Lynch with respect to the transactions contemplated by this Agreement.
Section 3.07. Material Information. At the time of filing, all filings
made by UJB and its subsidiaries after December 31, 1991 with the SEC and
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the statements
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<PAGE> 24
Exhibit 1
contained herein or therein, in light of the circumstances under which they were
made, not misleading. UJB has timely made all filings required by the Securities
Act and the Exchange Act.
Section 3.08. Corporate Action. Assuming due execution and delivery by
each of the other parties thereto, and subject to the approval by the
shareholders of UJB of this Agreement, the Merger and the other transactions
contemplated hereby in accordance with UJB's Restated Certificate of
Incorporation and the New Jersey Act at a meeting of such holders to be duly
called and held, UJB has the corporate power and is duly authorized by all
necessary corporate action to execute, deliver, and perform this Agreement
(except that no separate corporate action has been taken with respect to the
merger referred to in Section 5.18). The Board of Directors of UJB has taken all
action required by law, its Restated Certificate of Incorporation, its By-Laws
or otherwise to authorize the execution and delivery of this Agreement. This
Agreement is a valid and binding agreement of UJB enforceable in accordance with
its terms except as such enforcement may be limited by applicable principles of
equity, and by bankruptcy, insolvency, moratorium or other similar laws of
general applicability presently or hereafter in effect affecting the enforcement
of creditors' rights generally. The Board of Directors of UJB in authorizing the
execution of this Agreement has determined at the date of this Agreement to
recommend to the shareholders of UJB the approval of this Agreement, the Merger
and the other transactions contemplated hereby.
Section 3.09. Absence of Changes. There has not been, since December
31, 1994, any UJB Material Adverse Change.
Section 3.10. Allowance for Loan and Lease Losses. At June 30, 1995 and
thereafter, the allowances for loan and lease losses of UJB and its subsidiaries
are adequate in all material respects to provide for all losses on loans and
leases outstanding, and to the best of UJB's knowledge, the loan and lease
portfolios of UJB and its subsidiaries in excess of such allowances are
collectible in the ordinary course of business.
Section 3.11. Taxes and Tax Returns. Proper and accurate federal, state
and local returns have been timely filed by UJB and each of its bank
subsidiaries for all periods for which returns were due, including with respect
to employee income tax withholding, social security and unemployment taxes, and
the amounts shown thereon to be due and payable have been paid in full or
adequate provision therefor has been included on the books of UJB or its
appropriate subsidiary. Provision has been made on the books of UJB or its
appropriate bank subsidiary for all unpaid taxes, whether or not disputed, that
may become due and payable by UJB or any of its subsidiaries in future periods
in respect of transactions, sales or services previously occurring or performed.
UJB is not and has not been a United States real property holding corporation as
defined in Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code. Neither UJB nor any of its bank
subsidiaries is currently a party to any tax sharing or similar agreement with
any third party. There are no material matters, assessments, notices of
deficiency, demands for taxes, proceedings, audits or proposed deficiencies
pending or, to UJB's knowledge, threatened against UJB or any of its bank
subsidiaries and there have been no waivers of statutes of limitations or
agreements related to assessments or collection in respect of any federal, state
or local taxes. Neither UJB nor any of
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<PAGE> 25
its subsidiaries has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code by reason of a change in accounting method initiated
by UJB or any of its subsidiaries, and neither UJB nor any of its bank
subsidiaries has any knowledge that the IRS has proposed any such adjustment or
change in accounting method. UJB and its subsidiaries have complied in all
material respects with all requirements relating to information reporting and
withholding (including back-up withholding) and other requirements relating to
the reporting of interest, dividends and other reportable payments under the
Code and state and local tax laws and the regulations promulgated thereunder and
other requirements relating to reporting under federal law including record
keeping and reporting on monetary instruments transactions.
Section 3.12. Properties. UJB, directly or through its subsidiaries,
has good and marketable title to all of its properties and assets, tangible and
intangible, including those reflected in the most recent consolidated balance
sheet included in the UJB Financial Statements (except properties and assets
disposed of since that date in the ordinary course of business and OREO property
disposed of since that date, which properties and assets are not subject to any
mortgage, pledge, lien, charge or encumbrance other than as reflected in the UJB
Financial Statements or which in the aggregate do not materially adversely
affect or impair the operation of UJB and its subsidiaries taken as a whole).
UJB and each of its subsidiaries enjoys peaceful and undisturbed possession
under all material leases under which it or any of its subsidiaries is the
lessee, where the failure to enjoy such peaceful and undisturbed possession
would be likely to have a material adverse effect on UJB and its subsidiaries
taken as a whole.
Section 3.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by UJB or any of its subsidiaries or used by UJB or
any of its subsidiaries in its business are in a good state of maintenance and
repair, are in good operating condition, subject to normal wear and tear,
conform in all material respects to all applicable ordinances, regulations and
zoning laws, and are adequate for the business conducted by UJB or such
subsidiary subject to exceptions which are not, in the aggregate, material to
UJB and its subsidiaries, taken as a whole. UJB and each of its subsidiaries
maintains insurance (with companies which, to the best of UJB's knowledge, are
authorized to do business in New Jersey) against loss relating to such
properties in amounts which are customary, usual and prudent for corporations or
banks, as the case may be, of their size. Such policies are in full force and
effect.
Section 3.14. Non-bank Subsidiaries. The non-bank subsidiaries of UJB
did not, taken in the aggregate, constitute a "significant subsidiary" of UJB,
as that term is defined in Rule 1-02(v) of Regulation S-X of the SEC (17 CFR
Section 210.1-02(v)), at December 31, 1994.
Section 3.15. Fidelity Bonds. Since at least January 1, 1989, UJB and
each of its bank subsidiaries has continuously maintained fidelity bonds
insuring them against acts of dishonesty in such amounts as are customary, usual
and prudent for organizations of its size and business. All material claims
thereunder have been filed in a due and timely fashion. Neither UJB nor any of
its bank subsidiaries has reason to believe that its respective fidelity
coverage will not be
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<PAGE> 26
Exhibit 1
renewed by its carrier on substantially the same terms as the existing coverage,
except for possible premium increases unrelated to UJB's and its bank
subsidiaries' past claim experience.
Section 3.16. Labor Matters. To the knowledge of UJB, hours worked by
and payment made to employees of UJB and each of its bank subsidiaries have not
been in violation of the Fair Labor Standards Act or any applicable law dealing
with such matters; and all payments due from UJB and each of its bank
subsidiaries on account of employee health and welfare insurance have been paid
or accrued as a liability on the books of UJB or its appropriate bank
subsidiary, except for any immaterial noncompliance. UJB is in compliance with
all other laws and regulations relating to the employment of labor, including
all such laws and regulations relating to collective bargaining, discrimination,
civil rights, safety and health, plant closing (including the Worker Adjustment
Retraining and Notification Act), workers' compensation and the collection and
payment of withholding and Social Security and similar taxes, except for any
immaterial non-compliance. No labor dispute, strike or other work stoppage has
occurred and is continuing or is threatened with respect to UJB or any of its
bank subsidiaries. No employee of UJB or any of its bank subsidiaries has been
terminated, suspended, disciplined or dismissed under circumstances that are
likely to result in a material liability. To the knowledge of UJB, no employees
of UJB or any of its bank subsidiaries are unionized nor has such union
representation been requested by any group of employees or any other person
within the last two years. There are no organizing activities involving UJB
pending with, or, to the knowledge of UJB, threatened by, any labor organization
or group of employees of UJB.
Section 3.17. Books and Records. The minute books of UJB and each of
its bank subsidiaries contain complete and accurate records of and fairly
reflect all actions taken at all meetings and accurately reflect all other
corporate action of the shareholders and the boards of directors and each
committee thereof. The books and records of UJB and each of its bank
subsidiaries fairly and accurately reflect the transactions to which UJB and
each of its bank subsidiaries is or has been a party or by which their
properties are subject or bound, and such books and records have been properly
kept and maintained.
Section 3.18. Trademarks and Copyrights. Neither UJB nor any of its
subsidiaries has received notice or otherwise knows that the manner in which UJB
or any of its subsidiaries conducts its business including its current use of
any material trademark, trade name, service mark or copyright violates asserted
rights of others in any trademark, trade name, service mark, copyright or other
proprietary right.
Section 3.19. Environmental Matters. Except as disclosed in the Forms
10-K and 10-Q of UJB referred to in Section 3.02 hereof, to the knowledge of
UJB:
(a) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any (i) Present
Property of UJB or a
26
<PAGE> 27
Exhibit 1
subsidiary, (ii) Former Property of UJB or a subsidiary during the time of
previous ownership, occupancy, lease, holding or management or (iii)
Participation Facility during the time that UJB or a subsidiary participated in
the management of, or may be deemed to be or to have been an owner or operator
of, such facility, where such storage, treatment, dumping, spilling, disposing,
discharging, releasing, or depositing would have a material adverse effect on
UJB and its subsidiaries, taken as a whole;
(b) neither UJB nor any subsidiary has disposed of or arranged for the
disposal of Hazardous Substances from any Present Property, Former Property or
Participation Facility, and no owner or operator of a Participation Facility
disposed of, or arranged for the disposal of, Hazardous Substances from a
Participation Facility during the time that UJB or any subsidiary participated
in the management of, or may be deemed to be or to have been an owner or
operator of such Participation Facility, where such disposal or arranging for
disposal would have a material adverse effect on UJB and its subsidiaries, taken
as a whole;
(c) no Hazardous Substances have been stored, treated, dumped, spilled,
disposed, discharged, released or deposited at, under or on any Loan Property,
where such storage, treatment, dumping, spilling, disposing, discharging,
releasing, depositing or violation would have a material adverse effect on UJB
and its subsidiaries, taken as a whole, nor is there with respect to any Loan
Property any violation of an environmental law which could materially adversely
affect the value of such Loan Property to an extent which could prevent or delay
UJB or any its subsidiaries from recovering the full value of its loan in the
event of foreclosure on such Loan Property.
(d) Neither UJB nor any subsidiary (i) is aware of any investigations
contemplated, pending or completed by any environmental regulatory authority
with respect to any Present Property, Former Property, Loan Property or
Participation Facility, (ii) has received any information requests from any
environmental regulatory authority, or (iii) been named as a potentially
responsible or liable party in any Superfund, Resource Conservation and Recovery
Act, Toxic Substances Control Act or Clean Water Act proceeding or other
equivalent state or federal proceeding.
Section 3.20. Accounting, Tax and Regulatory Matters. Neither UJB nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-interests accounting
treatment or (B) as a reorganization within the meaning of Section 368 of the
Internal Revenue Code or (ii) materially impede or delay receipt of any approval
referred to in Section 4.01 or the consummation of the transactions contemplated
by this Agreement.
27
<PAGE> 28
Exhibit 1
Section 3.21. Ownership of Summit Stock. Other than pursuant to the
Summit Stock Option Agreement, as of the date hereof, neither UJB nor any of its
subsidiaries, beneficially owns, directly or indirectly, or are parties to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting, or disposing of, any of the outstanding share of capital stock of Summit
entitled to vote generally in the election of directors (other than Summit Stock
held in a fiduciary capacity or as a result of debts previously contracted).
Section 3.22. Concentrations of Credit. No customer or affiliated group
of customers (i) is owed by UJB or any subsidiary of UJB an aggregate amount
equal to more than 10% of the shareholders' equity of UJB or such subsidiary
(including deposits, other debts and contingent liabilities) or (ii) owes to UJB
or any of its subsidiaries an aggregate amount equal to more than 10% of the
shareholders' equity of UJB or such subsidiary (including loans and other debts,
guarantees of debts of third parties, and other contingent liabilities).
Section 3.23. Pension and Benefit Plans.
(a) The employee pension benefit plans, within the meaning of Section
3(2) of ERISA, maintained by UJB and its subsidiaries on the date hereof
(individually a "UJB Plan" and collectively the "UJB Plans"), in their present
form, comply in all material respects with all applicable requirements under
ERISA and the Code. Each UJB Plan and the trust created thereunder is qualified
and exempt under Sections 401(a) and 501(a) of the Code, and UJB or the
subsidiary whose employees are covered by such UJB Plan has received from the
IRS a determination letter to that effect. No event has occurred and to the
knowledge of UJB there has been no omission or failure to act which would
adversely affect such qualification or exemption. Each UJB Plan has been
administered and communicated to the participants and beneficiaries in all
material respects in accordance with its terms and ERISA. No employee of UJB or
any subsidiary whose employees are covered by a UJB Plan has engaged in any
action or, to the knowledge of UJB, has failed to act in such manner that, as a
result of such action or failure, a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due or to become due
under such UJB Plan or has been misled as to his or her rights under such UJB
Plan. No UJB Plan is subject to Section 412 of the Code or Title IV of ERISA. No
person has engaged in any prohibited transaction involving any UJB Plan or
associated trust within the meaning of Section 406 of ERISA or Section 4975 of
the Code. There are no pending or threatened claims (other than routine claims
for benefits) against the UJB Plans or any fiduciary thereof which would subject
UJB or any of its subsidiaries to a material liability. All reports, filings,
returns and disclosures required to be made to the participants and
beneficiaries, other employees, the SEC, the IRS, the U.S. Department of Labor
or any other governmental agency pursuant to the Code, ERISA, or other
applicable statute or regulation have been made in a timely manner and all such
reports, filings, returns and disclosures were true and correct in all material
respects. No material liability has been, or is likely to be, incurred on
account of delinquent or incomplete compliance or failure to comply with such
requirements. There has been no change in control of any UJB Plan.
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<PAGE> 29
(b) All bonus, deferred compensation, profit-sharing, retirement,
pension, stock option, stock award and stock purchase plans and all other
employee benefit plans, including medical, major medical, disability, life
insurance or dental plans covering employees generally maintained by UJB or any
of its subsidiaries other than UJB Plans (collectively "UJB Benefit Plans")
comply in all material respects with all applicable requirements imposed by the
Securities Act, the Exchange Act, ERISA, the Code, and all applicable rules and
regulations thereunder. The UJB Benefit Plans have been administered and
communicated to the participants and beneficiaries in all material respects in
accordance with their terms and ERISA, and no employee of UJB or any of its
subsidiaries has engaged in any action or, to the knowledge of UJB, has failed
to act in such manner that, as a result of such action or failure, a participant
or beneficiary or a nonparticipating employee has been denied benefits properly
due or to become due under the UJB Benefit Plans or has been misled as to their
rights under the UJB Benefit Plans. There are no pending or threatened claims
(other than routine claims for benefits) against the UJB Benefit Plans which
would subject UJB or any of its subsidiaries to a material liability. Any trust
which is intended to be tax-exempt has received a determination letter from the
IRS to that effect and no event has occurred which would adversely affect such
exemption. All reports, filings, returns and disclosures required to be made to
the participants and beneficiaries, other employees of UJB or any of its
subsidiaries, the SEC, the IRS, the U.S. Department of Labor and any other
governmental agency pursuant to the Code, ERISA, or other applicable statute or
regulation, if any, have been made in a timely manner and all such reports,
filings, returns and disclosures were true and correct in all material respects.
No material liability has been, or is likely to be, incurred on account of
delinquent or incomplete compliance or failure to comply with such requirements.
ARTICLE IV.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with UJB that:
Section 4.01. Preparation of Registration Statement and Applications
for Required Consents. Summit will cooperate with UJB in the preparation of a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the SEC under the Securities Act for the registration of the UJB Stock to
be issued in connection with the Merger, the proxy statement-prospectus
constituting part of the Registration Statement ("Summit Proxy-Prospectus") that
will be used by Summit to solicit approval of the Merger by its shareholders and
the proxy statement that will be used by UJB to solicit approval of the Merger
by its shareholders ("UJB Proxy Statement"). In connection therewith, Summit
will furnish all financial or other information, including using best efforts to
obtain customary consents, certificates, opinions of counsel and other items
concerning Summit reasonably deemed necessary by counsel to UJB for the filing
or preparation for filing under the Securities Act and the Exchange Act of the
Registration Statement (including the proxy statement portion thereof). Summit
will cooperate with UJB and provide
29
<PAGE> 30
such information as may be advisable in obtaining an order of effectiveness for
the Registration Statement, appropriate permits or approvals under state
securities and "blue sky" laws, the required approval under the Bank Holding
Company Act by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), the listing of the Shares on the New York Stock
Exchange (subject to official notice of issuance) and any other governmental or
regulatory consents or approvals or the taking of any other governmental or
regulatory action necessary to consummate the Merger without a material adverse
effect on the business, results of operations, assets or financial condition of
the Surviving Corporation and its subsidiaries, taken as a whole (the "Required
Consents"). UJB, reasonably in advance of making such filings, will provide
Summit and its counsel a reasonable opportunity to comment on such filings and
regulatory applications and will give due consideration to any comments of
Summit and its counsel before making any such filing or application; and UJB
will provide Summit with copies of all such filings and applications at the time
filed if such filings and applications are made at any time before the Effective
Time. Summit covenants and agrees that all information furnished by Summit for
inclusion in the Registration Statement, the UJB Proxy Statement, the Summit
Proxy-Prospectus, all applications to appropriate regulatory agencies for
approval of the Merger, and all information furnished by Summit to UJB pursuant
to this Agreement or in connection with obtaining Required Consents, will comply
in all material respects with the provisions of applicable law, including the
Securities Act and the Exchange Act and the rules and regulations of the SEC
thereunder, and will not contain any untrue statement of a material fact and
will not omit to state any material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
Section 4.02. Notice of Adverse Changes. Summit will promptly advise
UJB in writing of (a) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of Summit contained
in this Agreement or the Summit Schedules or the materials furnished pursuant to
the Post-Signing Disclosure List (as defined in Section 4.09), if made on or as
of the date of such event or the Closing Date, untrue or inaccurate in any
material respect, (b) any Summit Material Adverse Change, (c) any inability of
Summit to perform or comply in any material respect with the terms or conditions
of this Agreement, (d) the institution or threat of institution of litigation
involving Summit or any of its subsidiaries or assets, which, if determined
adversely to Summit or any of its subsidiaries, would have a material adverse
effect upon Summit and its subsidiaries taken as a whole or the ability of the
parties to timely consummate the Merger and the related transactions, and (e)
any governmental complaint, investigation, hearing, or communication indicating
that such litigation is contemplated, (f) any written notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by Summit or a subsidiary
subsequent to the date hereof and prior to the Effective Time, under any
agreement, indenture or instrument to which Summit or a subsidiary is a party or
is subject and which is material to the business, operation or condition
(financial or otherwise) of Summit and its subsidiaries taken as a whole, and
(g) any written notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this
30
<PAGE> 31
Exhibit 1
Agreement including the Merger. Summit agrees that the delivery of such notice
shall not constitute a waiver by UJB of any of the provisions of Articles VI or
VII.
Section 4.03. Meeting of Shareholders. Summit will call a meeting of
its shareholders for the purpose of voting upon this Agreement, the Merger and
the transactions contemplated hereby to be held as promptly as practicable and,
in connection therewith, will comply with the New Jersey Act and the Exchange
Act and all regulations promulgated thereunder governing shareholder meetings
and proxy solicitations. In connection with such meeting, Summit shall mail the
Summit Proxy-Prospectus to its shareholders and use, unless in the written
opinion of counsel such action would be a breach of the fiduciary duties of the
directors under applicable law, its best efforts to obtain shareholder approval
of this Agreement, the Merger and the transactions contemplated hereby.
Section 4.04. Copies of Filings. Without limiting the provisions of
Section 4.01, Summit will deliver to UJB, at least twenty-four hours prior to an
anticipated date of filing or distribution, all documents to be filed with the
SEC or any bank regulatory authority or to be distributed in any manner to the
shareholders of Summit or the public.
Section 4.05. No Material Transactions. Until the Effective Time,
Summit will not and will not allow any of its subsidiaries to, without the prior
written consent of UJB: (a) pay (or make a declaration which creates an
obligation to pay) any cash dividends, at a quarterly rate in excess of $.21 per
share of Summit Common, other than dividends from subsidiaries of Summit to
Summit or other subsidiaries of Summit and dividends payable on the Summit
Preferred; (b) declare or distribute any stock dividend or authorize or effect a
stock split; (c) except in connection with the Garden State Agreement and as
listed on Summit Schedule 4.05(c), merge with, consolidate with, or sell any
material asset to any other corporation, bank, or person (except for mergers of
subsidiaries of Summit into other subsidiaries of Summit) or enter into any
other transaction not in the ordinary course of business; (d) incur any
liability or obligation other than intracompany obligations, make or agree to
make any commitment or disbursement, acquire or dispose or agree to acquire or
dispose of any property or asset (tangible or intangible), make or agree to make
any contract or agreement or engage or agree to engage in any other transaction,
except transactions in the ordinary course of business and other transactions
aggregating not more than $20,000,000; (e) subject any of its properties or
assets to any lien, claim, charge, option or encumbrance, except in the ordinary
course of business and for amounts not material in the aggregate to the Summit
and its subsidiaries taken as a whole; (f) increase or enter into any agreement
to increase the rate of compensation of all employees on the date hereof at an
average annualized rate exceeding five percent (5%) in the aggregate, or pay any
employee bonuses other than bonuses payable under the existing employee
compensation plans providing for formula bonus awards; (g) except as disclosed
in Summit Schedule 4.05(g), create, adopt or modify any employment or severance
arrangement or any pension or profit sharing plan, bonus, deferred compensation,
death benefit, retirement or other employee or director benefit plan of
whatsoever nature, or change the level of benefits under any such arrangement or
plan, or increase any severance or termination pay benefit or any other fringe
benefit, or make or increase any grant or award under any compensation plan,
including stock
31
<PAGE> 32
Exhibit 1
incentive and stock option plans; (h) distribute, issue, sell or grant any of
its Equity Securities or any stock appreciation rights except pursuant to the
exercise of director and employee stock options under the Summit Stock Award
Plans and Crestmont Plan and pursuant to the Summit Dividend Reinvestment Plan
and Garden State Agreement; (i) except in a fiduciary capacity, purchase,
redeem, retire, repurchase, or exchange, or otherwise acquire or dispose of,
directly or indirectly, any of its Equity Securities, whether pursuant to the
terms of such Equity Securities or otherwise, or enter into any agreement
providing for any of the foregoing transactions; (j) amend its Certificate of
Incorporation, By-Laws or Shareholder Rights Plan; (k) modify, amend or cancel
any of its existing borrowings other than intra-corporate borrowings and
borrowings of federal funds from correspondent banks and the Federal Reserve
Bank of New York or the Federal Home Loan Bank of New York or enter into any
contract, agreement, lease or understanding, or any contracts, agreements,
leases or understandings other than those in the ordinary course of business or
which do not involve the creation of any material obligation or release of any
material right of Summit or any of its subsidiaries, taken as a whole; (l)
create, or accelerate the exercisability of, any stock appreciation rights or
options or the release of any restrictions on stock issued under the UJB Benefit
Plans; (m) make any employer contribution to a Summit Plan or a Benefit Plan
which under the terms of the particular Plan is voluntary and within the sole
discretion of Summit to make; or (n) make any discretionary determination or
take discretionary action, including the making of awards, by its Compensation
Committee or otherwise, under or with respect to any Summit Stock Award Plan
other than routine administration of outstanding awards thereunder.
Section 4.06. Operation of Business in Ordinary Course. Summit, on
behalf of itself and its subsidiaries, covenants and agrees that from and after
the date hereof and until the Effective Time, it and its subsidiaries: (a) will
carry on their business diligently and substantially in the same manner as
heretofore and will not institute any unusual or novel methods of management or
operation of their properties or business and will maintain such in their
customary manner; (b) will use their reasonable best efforts to continue in
effect their present insurance coverage on all properties, assets, business and
personnel; (c) will use their reasonable best efforts to preserve their business
organization intact, preserve their present relationships with customers,
suppliers, and others having business dealings with them, and keep available
their present employees, provided, however, that Summit or any of its
subsidiaries may terminate any employee for unsatisfactory performance or other
reasonable business purpose, and provided further, however, that Summit will
notify and consult with UJB prior to terminating any of the five highest paid
employees of Summit; (d) will use their reasonable best efforts to continue to
maintain fidelity bonds insuring Summit and its subsidiaries against acts of
dishonesty by each of their employees in such amounts (not less than present
coverage) as are customary, usual and prudent for corporations or banks, as
the case may be, of their size; (e) will not knowingly do anything or fail to do
anything which will cause a breach of or default under any representation,
warranty or covenant of Summit or any contract, agreement, commitment or
obligation to which they or any one of them is a party or by which they or any
of their assets or properties may be bound or committed if the consequence of
such, individually or in the aggregate, would be likely to have a material
adverse effect on Summit and its subsidiaries taken as a whole; and (f) will not
change
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<PAGE> 33
their methods of accounting in effect at December 31, 1994, or change any of
their methods of reporting income and deductions for Federal income tax purposes
from those employed in the preparation of their Federal income tax returns for
the taxable year ending December 31, 1994, except as required by changes in
laws, regulations or generally accepted accounting principles or changes that
are to a preferable accounting method, and approved in writing by Summit's
independent certified public accountants.
Section 4.07. Further Actions. Summit will: (a) execute and deliver
such instruments and take such other actions as UJB may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of UJB set forth in Articles
VI and VII hereof are satisfied.
Section 4.08. Cooperation. Until the Effective Time, Summit will give
to UJB and to its representatives, including its accountants, KPMG Peat Marwick
LLP, and its legal counsel, full access during normal business hours to all of
its property, documents, contracts and records relevant to this Agreement and
the Merger, will provide such information with respect to its business affairs
and properties as UJB from time to time may reasonably request, and will cause
its managerial employees, counsel and independent certified public accountants
to be available on reasonable request to answer reasonable questions of UJB's
representatives covering the business and affairs of Summit or any of its
subsidiaries.
Section 4.09. Copies of Documents. As promptly as practicable, but not
later than 30 days after the date hereof, Summit will furnish to or make
available to UJB all the documents, contracts, agreements, papers, and writings
referred to in the Summit Schedules or called for by the list or lists provided
by UJB to Summit on or prior to the date hereof (the "Post-Signing Disclosure
List").
Section 4.10. Applicable Laws. Summit and its subsidiaries will use
their best efforts to comply promptly with all requirements which federal or
state law may impose on Summit or any of its subsidiaries with respect to the
Merger and will promptly cooperate with and furnish information to UJB in
connection with any such requirements imposed upon UJB or on any of its
subsidiaries in connection with the Merger.
Section 4.11. Agreements of Affiliated Shareholders. Summit agrees to
furnish to UJB, not later than 10 business days prior to the date of mailing of
the Summit Proxy-Prospectus, a list of each person who, in the opinion of the
General Counsel of Summit, is an affiliate of Summit for the purposes of Rule
145 under the Securities Act (a "Summit Affiliate") and shall use its best
efforts to cause each Summit Affiliate to enter into, prior to the date of
mailing of the Summit
33
<PAGE> 34
Exhibit 1
Proxy-Prospectus, an agreement, satisfactory in form and substance to UJB,
substantially in the form of Exhibit C hereto, and effective prior to such date
(an "Affiliate Agreement").
Section 4.12. Loans and Leases to Affiliates. All loans and leases
hereafter made by Summit or any of its subsidiaries to any of its present or
former directors or, executive officers, or their respective related interests
shall be made only in the ordinary course of business and on the same terms and
at the same interest rates as those prevailing for comparable transactions with
others and shall not involve more than the normal risk of repayment or present
other unfavorable features.
Section 4.13. Confidentiality. All information furnished by UJB to
Summit or its representatives pursuant hereto shall be treated as the sole
property of UJB and, if the Merger shall not occur, Summit and its
representatives shall return to UJB all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Summit or any committee thereof for the purpose of considering
this Agreement, the Merger and the related transactions may be kept and
maintained by Summit with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. Summit shall, and shall
use its best efforts to cause its representatives to, keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for five years from the date the
proposed Merger is abandoned and shall not apply to: (i) any information which
(x) was legally in Summit's possession prior to the disclosure thereof by UJB,
(y) was then generally known to the public, or (z) was disclosed to Summit by a
third party not bound by an obligation of confidentiality; or (ii) disclosures
made as required by law. It is further agreed that if, in the absence of a
protective order or the receipt of a waiver hereunder, Summit is nonetheless, in
the written opinion of its outside counsel, compelled to disclose information
concerning UJB to any tribunal or governmental body or agency or else stand
liable for contempt or suffer other censure or penalty, Summit may disclose such
information to such tribunal or governmental body or agency without liability
hereunder and shall so notify UJB.
Section 4.14. Dividends Summit will coordinate with UJB the declaration
of any dividends and the record and payment dates thereof so that the holders of
Summit Stock will not be paid two dividends for a single calendar quarter with
respect to their shares of Summit Stock and any shares of UJB Stock they become
entitled to receive in the Merger or fail to be paid one dividend in each
calendar quarter.
Section 4.15. Best Efforts to Ensure Pooling. (a) Summit agrees to use,
and agrees to cause each of its subsidiaries to use, its and their best efforts
to cause the Merger to qualify for pooling-of-interests accounting treatment.
34
<PAGE> 35
Exhibit 1
Section 4.16. Acquisition Proposals. Summit agrees that neither Summit
nor any of its subsidiaries nor any of the respective officers and director of
Summit or its subsidiaries shall, and Summit shall direct and use its best
effort to cause its employees, agents and representatives (including, without
limitation, any investment banker, broker, financial or investment advisor,
attorney or accountant retained by Summit or any of its subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal or offer (including, without limitation, any proposal,
tender offer or exchange offer, consolidation, business combination, takeover or
similar transactions other than the Merger involving, or any purchase of all or
any significant portion of the assets or any equity securities of, Summit or any
of its subsidiaries (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal") or, except to the extent legally required for the
discharge by the Board of Directors of its fiduciary duties, as advised by
written opinion of counsel furnished to UJB, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, or enter into any agreement or agreement in principle with any
person relating to as an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. Summit will
immediately cease and cause to be terminated any existing activities, discussion
or negotiations with any parties conducted heretofore with respect to any of the
foregoing. Summit will take the necessary steps to inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section. In addition, Summit will notify UJB by telephone to its chief
executive officer or general counsel promptly upon receipt of any inquiry with
respect to a proposed Acquisition Proposal with another person or receipt of a
request for information from any governmental or regulatory authority with
respect to a proposed acquisition of Summit or any of its subsidiaries or assets
by another party, and will immediately deliver as soon as possible by facsimile
transmission, receipt acknowledged, to the UJB officer notified as required
above a copy of any document relating thereto promptly after any such document
is received by Summit.
ARTICLE V.
COVENANTS OF UJB
UJB hereby covenants and agrees with Summit that:
Section 5.01. Approvals and Registrations. Based on such assistance and
cooperation of Summit as UJB may reasonably request, UJB will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement, the
Summit Proxy-Prospectus and the UJB Proxy Statement, (b) with the Federal
Reserve Board, as an application for approval of the Merger, and (c) with the
New York Stock Exchange, as an application for the listing of the shares of UJB
Stock issuable upon the Merger, subject to official notice of issuance, except
that UJB shall have no obligation to file a new registration statement or a
post-effective amendment to the Registration Statement covering any reoffering
of UJB Stock by Summit Affiliates. In connection therewith, UJB will furnish all
financial or other information, including using best efforts to obtain
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<PAGE> 36
customary consents, certificates, opinions of counsel and other items concerning
UJB reasonably deemed necessary by counsel to Summit for the filing or
preparation for filing under the Securities Act and the Exchange Act of the
Registration Statement. UJB covenants and agrees that all information furnished
by UJB for inclusion in the Registration Statement, the Summit Proxy-Prospectus
and the UJB Proxy Statement, all applications to appropriate regulatory agencies
for approval of the Merger and related transactions and in connection with the
Required Consents will comply in all material respects with the provisions of
applicable law, including the Securities Act and the Exchange Act and the rules
and regulations of the SEC thereunder, and will not contain any untrue statement
of a material fact and will not omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
Section 5.02. Notice of Adverse Changes. UJB will promptly advise
Summit in writing of (a) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of UJB contained in
this Agreement or the UJB Schedules, if made on or as of the date of such event
or the Closing Date, untrue or inaccurate in any material respect, (b) any UJB
Material Adverse Change, (c) any inability or perceived inability of UJB or any
of its subsidiaries to perform or comply with the terms or conditions of this
Agreement, (d) the institution or threat of institution of material litigation
involving UJB or any of its subsidiaries or its assets which, if determined
adversely to UJB or any of its subsidiaries, would have a material adverse
effect on UJB and its subsidiaries taken as a whole or the Merger and related
transactions, (e) any governmental complaint, investigation, hearing, or
communication indicating that such litigation is contemplated, (f) any written
notice of, or other communication relating to, a default or event which, with
notice or lapse of time or both, would become a default, received by UJB or any
of its subsidiaries subsequent to the date hereof and prior to the Effective
Time, under any agreement, indenture or instrument to which UJB or a subsidiary
is a party or is subject and which is material to the business, operation or
condition (financial or otherwise) of UJB and its subsidiaries taken as a whole,
and (g) any written notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement including the Merger. UJB agrees
that the delivery of such notice shall not constitute a waiver by Summit of any
of the provisions of Articles VI or VIII.
Section 5.03. Meeting of Shareholders. UJB will call a meeting of its
shareholders for the purpose of voting upon the Agreement, the Merger and the
transactions contemplated hereby to be held as promptly as practicable and, in
connection therewith, will comply with the New Jersey Act and the Exchange Act
and all regulations promulgated thereunder governing shareholder meetings and
proxy solicitations. In connection with such meeting, UJB shall mail the UJB
Proxy Statement to its shareholders and use its best efforts to obtain such
shareholder approval of this Agreement, the Merger and the transactions
contemplated hereby.
Section 5.04. Copies of Filings. UJB will promptly provide Summit with
copies of its quarterly financial statements for the quarterly periods ending
between the date of this Agreement
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Exhibit 1
and the Closing Date and copies of all reports filed by it during such period
with the SEC on Forms 10-Q, 8-K and 10-K.
Section 5.05. Operation of Business. UJB, on behalf of itself and its
bank subsidiaries, covenants and agrees that from and after the date hereof and
until the Effective Time it: (a) will use its best efforts to continue in effect
its present insurance coverage on all properties, assets, business, and
personnel; (b) will use its best efforts to preserve its business organization
intact and preserve its present relationships with customers, suppliers, and
others having business dealings with it; (c) will use its best efforts to
continue to maintain fidelity bonds insuring it against acts of dishonesty by
each of its employees in such amounts (not less than present coverage) as are
customary, usual and prudent for corporations or banks, as the case may be, of
its size; (d) will not do anything or fail to do anything which will cause a
breach of or default under any representation, warranty or covenant of UJB or
any contract, agreement, commitment or obligation to which it is a party or by
which it or any of its assets or properties may be bound or committed if the
consequences of such breach may have a material adverse effect on UJB and its
subsidiaries taken as a whole; (e) will not change its methods of accounting in
effect at December 31, 1994, or change any of its methods of reporting income
and deductions for Federal income tax purposes from those employed in the
preparation of its Federal income tax returns for the taxable year ending
December 31, 1994, except as required by changes in laws, regulations or
generally accepted accounting principles or changes that are to a preferable
accounting method, and approved by UJB's independent certified public
accountants; and (f) will carry on their business diligently and substantially
in the same manner as heretofore and will not institute any unusual or novel
methods of management or operation of their properties or business and will
maintain such in their customary manner.
Section 5.06. Further Actions. UJB will: (a) execute and deliver such
instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of Summit set forth in
Articles VI and VIII hereof are satisfied and the transactions contemplated
hereby are consummated.
Section 5.07. Applicable Laws. UJB will use its best efforts to comply
promptly with all requirements which federal or state law may impose on UJB with
respect to the Merger and
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will promptly cooperate with and furnish information to Summit in connection
with any such requirements imposed upon Summit or on any of its subsidiaries in
connection with the Merger.
Section 5.08. Indemnification and Insurance.
(a) UJB shall indemnify, and advance expenses in matters that may be
subject to indemnification to, persons who served as directors and officers of
Summit or any subsidiary of Summit on or before the Effective Time with respect
to liabilities and claims (and related expenses) made against them resulting
from their service as such prior to the Effective Time in accordance with and
subject to the requirements and other provisions of the more favorable to the
director or officer of (i) Summit's Restated Certificate of Incorporation and
By-Laws or (ii) UJB's Restated Certificate of Incorporation and By-Laws, as in
effect on the date of this Agreement and applicable provisions of law to the
same extent as UJB is obliged thereunder to indemnify and advance expenses to
its own directors and officers with respect to liabilities and claims made
against them resulting from their service for UJB.
(b) For a period of six (6) years after the Effective Time, UJB will
use its best efforts to provide to the persons who served as directors or
officers of Summit or any subsidiary of Summit on or before the Effective Time
insurance against liabilities and claims (and related expenses) made against
them resulting from their service as such prior to the Effective Time
substantially similar in all material respects to the insurance coverage
provided to them in such capacities at the date hereof; provided, however, that
in no event shall UJB be required to expend more than 200% of the current amount
expended by Summit (the "Insurance Amount") to maintain or procure insurance
coverage pursuant hereto, and, further provided, that if UJB is unable to
maintain or obtain the insurance called for by this Section 5.08 on commercially
reasonable terms, UJB shall use its best efforts to obtain as much comparable
insurance as available for the Insurance Amount. In lieu of the foregoing,
Summit shall renew any existing insurance or purchase any "discovery period"
insurance provided for thereunder at UJB's request and expense.
(c) This Section 5.08 shall be construed as an agreement as to which
the directors and officers of Summit referred to herein are intended to be third
party beneficiaries and shall be enforceable by the such persons and their heirs
and representatives.
(d) If UJB or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then in each such case, UJB or such
successor or assign shall take such actions as shall be necessary for the
successors or assigns of UJB to assume the obligations set forth in this Section
5.08.
Section 5.09. Unpaid Summit Dividends. By virtue of the Merger and
without further action on anyone's part, UJB shall assume the obligation of
Summit to pay dividends, if any, on Summit Stock which have a record date prior
to the Effective Time but are not payable until after
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the Effective Time.
Section 5.10. Cooperation. Until the Effective Time, UJB will give to
Summit and to its representatives, including its accountants, KPMG Peat Marwick
LLP, and its legal counsel, full access during normal business hours to all of
its property, documents, contracts and records relevant to this Agreement and
the Merger, will provide such information with respect to its business affairs
and properties as Summit from time to time may reasonably request, and will
cause its managerial employees, counsel and independent certified public
accountants to be available on reasonable request to answer questions of
Summit's representatives covering the business and affairs of UJB or any of its
subsidiaries.
Section 5.11. Confidentiality. All information furnished by Summit to
UJB or its representatives pursuant hereto shall be treated as the sole property
of Summit and, if the Merger shall not occur, UJB and its representatives shall
return to Summit all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information, except that any such confidential information or notes
or abstracts therefrom presented to the Board of Directors of UJB or any
committee thereof for the purpose of considering this Agreement, the Merger and
the related transactions may be kept and maintained by UJB with other records of
Board, and Board committee, meetings subject to a continuing obligation of
confidentiality. UJB shall, and shall use its best efforts, to cause its
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and shall
not apply to: (i) any information which (x) was legally in UJB's possession
prior to the disclosure thereof by Summit, (y) was then generally known to the
public, or (z) was disclosed to Summit by a third party not bound by an
obligation of confidentiality; or (ii) disclosures made as required by law. It
is further agreed that if, in the absence of a protective order or the receipt
of a waiver hereunder, UJB is nonetheless, in the written opinion of its outside
counsel, compelled to disclose information concerning Summit to any tribunal or
governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, UJB may disclose such information to such tribunal or
governmental body or agency without liability hereunder and shall so notify
Summit.
Section 5.12. Employee Matters.
(a) After the Effective Time, UJB may in its discretion maintain,
terminate, merge or dispose of (i) the Benefit Plans, and (ii) all other health
or welfare plans, if any, maintained by Summit (the "Health or Welfare Plans");
provided, however, that any action taken by UJB shall comply with ERISA, the
Code and other applicable laws and, provided further, that if UJB maintains a
plan which is similar in character or nature to, or which covers risks similar
to those covered by, a Benefit Plan or a Health or Welfare Plan maintained by
Summit then, if such Benefit Plan or Health and Welfare Plan is terminated by
UJB, is merged into the similar UJB plan or otherwise rendered inactive by UJB,
UJB shall offer to the former employees of Summit affected by such plan
termination, Merger
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<PAGE> 40
Exhibit 1
or cessation of activity the opportunity to participate in the similar plan of
UJB (i) without being subject to any exclusions due to pre-existing conditions,
(ii) with credit for any deductibles satisfied while covered by a Summit Benefit
Plan or Health and Welfare Plan during the plan year in which the plan
termination, merger or cessation of activity takes place, and (iii) with credit
for years of service with Summit for purposes of eligibility and vesting;
provided, however, that this Section 5.12(a) shall not be construed to apply to
any employee or executive compensation plan of UJB which by its terms or nature
or by practice of UJB is or has been limited to employees selected for
participation in the discretion of a plan administrator, but Summit employees
shall be eligible for participation on the same basis as other UJB employees
similarly situated.
(b) After the Effective Time, UJB may in its discretion maintain,
terminate or merge the Summit Plans; provided, however, that any action taken by
UJB shall comply with ERISA, the Code and other applicable laws and, provided
further, that if UJB maintains an employee pension benefit plan which is similar
in character to a Summit Plan then, if such Summit Plan is terminated or merged
into the similar UJB plan by UJB, UJB shall include the former employees of
Summit affected by such plan termination or merger in the similar plan of UJB
with credit for years of service recognized under the Summit Plan for purposes
of eligibility and vesting. In the event UJB merges the Summit Bancorporation
Retirement Plan or the Summit Supplemental Executive Retirement Plan (the
"Summit Pension Plans") into the corresponding defined benefit plan and
supplemental executive retirement plan maintained by UJB (the "UJB Pension
Plans"), UJB will amend the UJB Pension Plans to provide that such employees'
accrued benefits under the UJB Pension Plans will be the sum of (x) the accrued
benefits calculated in accordance with the benefit formulae of the UJB Pension
Plans for all periods after the Summit Pension Plans are merged into the UJB
Pension Plans, and (y) the accrued benefits calculated in accordance with the
benefit formulae of the Summit Pension Plans for all periods before the merger;
provided, however, that for so long as it shall be the practice of UJB that
compensation earned after the date of a pension plan merger be included for
purposes of determining a participants' average final earnings under the pension
plan that merged out of existence, UJB shall include Summit participants in the
practice to the extent applicable to each, provided, further, however, that UJB
shall be free to change its practice in its discretion at any time without
notice so long as it treats Summit participants after the change the same as all
other UJB pension plan participants similarly situated.
(c) Summit employees who are participants on the date hereof in the
Summit Supplemental Executive Retirement Plan as amended through January 1,
1989, as previously delivered to UJB, will continue to participate therein,
until such plan is amended, merged or otherwise rendered inactive by UJB,
provided, however, that any such amendment, merger or other inactivation shall
preserve the rights of such employees under Section 3.1 of such plan.
(d) Any Summit employee whose employment is terminated during the
one-year period commencing with the Effective Date shall be subject to the
conditions and entitled to the benefits of the Summit Severance Pay Policy
heretofore delivered to UJB.
(e) UJB agrees that Summit may amend the 401(k) savings plan maintained
by Summit on the
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Exhibit 1
date hereof to provide for immediate vesting of benefits if in the written
opinion of KPMG Peat Marwick LLP such amendment would be consistent with
accounting for the Merger as a pooling of interests.
Section 5.13. Best Efforts to Ensure Pooling. UJB agrees to use, and
agrees to cause each of its subsidiaries to use, its and their best efforts to
cause the Merger to qualify for pooling-of-interests accounting treatment.
Section 5.14. Special Dividends. UJB will not declare or pay any
extraordinary or special dividend on UJB Common or any other share of UJB
capital stock.
Section 5.15. Charter, By-Law Changes. UJB agrees (a) not to amend its
Restated Certificate of Incorporation or ByLaws in any manner which would have a
material adverse impact on the Merger and related transactions, and (b) not to
amend its Restated Certificate of Incorporation without the prior written
consent of Summit, which shall not be unreasonably withheld or delayed, in any
manner which would be materially adverse to Summit or its shareholders.
Section 5.16. No Actions. Subject to transactions permitted under
Section 8.02, UJB will not, and will cause its subsidiaries not to, take, or
omit to take, any action, including but not limited to making or agreeing to
make any acquisition, that would (i) adversely affect the ability of Summit or
UJB to obtain any necessary approvals, consents, clearances, actions, waivers or
advisory opinions of any governmental authority required for the transactions
contemplated hereby, (ii) adversely affect the ability of UJB to perform its
undertakings and agreements under this Agreement or (iii) adversely affect the
ability of UJB to otherwise consummate the transactions contemplated by this
Agreement.
Section 5.17. Publication of Results of Combined Operations. If the
Closing takes place within the first or third month of any calendar quarter, UJB
will publish financial results including at least a calendar month of not less
than 30 days of post-merger combined operations which shall be published
promptly following the first full calendar month following the Closing and which
shall be in accordance with Section 201.01 of the Commission's Codification of
Financial Reporting Policies, and UJB shall file a Form 8-K for this purpose if
necessary.
Section 5.18. Change of Bank Name. As soon as reasonably practicable
following the Effective Time, Bank and UJ Bank, shall be merged in accordance
with the provisions of the New Jersey Banking Act of 1948 under the name of
"Summit Bank".
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Exhibit 1
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS
OF UJB AND SUMMIT
The respective obligations of UJB and Summit under this Agreement to
consummate the Merger are subject to the satisfaction of all the following
conditions, compliance with which or the occurrence of which may only be waived
in whole or in part in writing by UJB and Summit:
Section 6.01. Receipt of Required Consents. UJB and Summit shall have
received the Required Consents; the Required Consents shall not, in the
reasonable opinion of UJB or Summit, contain restrictions or limitations which
would materially adversely affect the financial condition of the surviving
corporation after consummation of the Merger; the Required Consents and the
transactions contemplated hereby shall not on the Closing Date be contested by
any federal or state governmental authority; and on the Closing Date the
Required Consents needed for the Merger shall have been obtained and shall not
have been withdrawn or suspended.
Section 6.02. Effective Registration Statement. The Registration
Statement shall have been declared effective by the SEC; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and remain in effect on the Closing Date; and no proceeding for that
purpose shall have been initiated or, to the knowledge of UJB or Summit, shall
be contemplated or threatened by the SEC on the Closing Date.
Section 6.03. Tax Matters. At the time of the filing of the
Registration Statement and at the Closing Date, UJB shall have received an
opinion from Thompson & Mitchell, special counsel to UJB, as to the matters
referred to in subparagraph (a) below, and Summit shall have received an opinion
from Sullivan & Cromwell, special counsel to Summit, as to all matters referred
to below (the "Tax Opinions"), reasonably satisfactory in form and substance to
UJB or Summit, as the case may be, to the effect that (a) the Merger will
constitute a reorganization within the meaning of Section 368 of the Code, (b)
except with respect to fractional share interests, holders of Summit Common who
receive solely UJB Common in the Merger will not recognize gain or loss for
federal income tax purposes, (c) holders of Summit Preferred who receive solely
UJB Preferred in the Merger will not recognize gain or loss for federal income
tax purposes, (d) the basis of such UJB Common (including any fractional share
for which cash is received) will equal the basis of the Summit Common for which
it is exchanged, and (e) the basis of such UJB Preferred will equal the basis of
the Summit Preferred for which it is exchanged, (f) the holding period of such
UJB Common (including any fractional share for which cash is received) will
include the holding period of the Summit Common for which it is exchanged,
assuming that such Summit Common is a capital asset in the hands of the holder
thereof at the Effective Time, and (g) the holding period of such UJB Preferred
will include the holding period of the Summit Preferred for which it is
exchanged, assuming that such Summit Preferred is a capital asset in the hands
of the holder thereof at the Effective Time. The Tax Opinions may be based upon
assumptions and representations contained or referred to therein.
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<PAGE> 43
In rendering the Tax Opinions, such counsel may rely as to matters of fact, to
the extent they deem proper, on certificates and information obtained from
officers of UJB and Summit, and UJB and Summit agree to provide to such counsel
such certificates as they may reasonably request. The parties recognize that
such counsel may require the execution of tax certificates as a condition to
furnishing the Tax Opinions.
In addition, no condition or set of facts or circumstances shall exist at the
Closing Date which will either (x) preclude any of the parties to this Agreement
from satisfying the terms or conditions of, or assumptions made or
representations referred to in, the Tax Opinions, as the case may be, or (y)
result in any of the factual assumptions contained in the Tax Opinions being
untrue.
Section 6.04. Absence of Litigation. At the Closing Date, no
investigation by any state or federal agency, and no action, suit, arbitration
or proceeding before any court, state or federal agency, panel or governmental
or regulatory body or authority, shall have been instituted or threatened
against UJB or any of its subsidiaries, or Summit or any of its subsidiaries,
that is material to the Merger or to the financial condition of UJB and its
subsidiaries taken as a whole or Summit and its subsidiaries taken as a whole,
as the case may be. At the Closing Date, no order, decree, judgment, or
regulation shall have been entered or law or regulation adopted by any such
agency, panel, body or authority which enjoined or has a material adverse effect
upon the Merger or on the financial condition of UJB and its subsidiaries taken
as a whole or Summit and its subsidiaries taken as a whole, as the case may be.
Section 6.05. NYSE Listing. At the Closing Date, the shares of UJB
Stock to be issued in the Merger shall have been listed on the New York Stock
Exchange subject to official notice of issuance.
Section 6.06 Shareholder Approval. The shareholders of UJB and Summit
shall each have authorized and approved the Merger, this Agreement and all
transactions contemplated by this Agreement as and to the extent required by all
applicable laws and regulations and the provisions of all instruments of
corporate governance.
Section 6.07. Pooling-of-Interests Letter. The parties hereto shall
have received a letter from KPMG Peat Marwick to the effect that, based on the
facts known to such accountants, the Merger will qualify for
pooling-of-interests accounting treatment if consummated in accordance with this
Agreement.
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<PAGE> 44
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UJB
The obligation of UJB to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by UJB in writing:
Section 7.01. No Adverse Changes. During the period from December 31,
1994 to the Closing Date there shall not have been any Summit Material Adverse
Change.
Section 7.02. Representations and Covenants.
(a) Except with respect to matters resulting from transactions
specifically contemplated by this Agreement, all representations and warranties
made by Summit in this Agreement and the Summit Schedules and the material
furnished pursuant to the Post-Signing Disclosure List shall be true and correct
in all material respects on the date of this Agreement and, in all material
respects, on the Closing Date with the same force and effect as if such
representations and warranties were made on the Closing Date. The condition in
this Section 7.02(a) shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct shall constitute,
individually or in the aggregate, a Summit Material Adverse Change or have a
material adverse impact upon the consummation of the Merger and related
transactions.
(b) Summit shall have complied in all material respects with all
covenants and agreements contained herein required to be performed by Summit on
or before the Closing Date.
Section 7.03. Secretary's Certificate. Summit shall have furnished to
UJB a certificate signed by the Secretary of Summit and dated the Closing Date,
certifying to the satisfaction of the conditions set forth in Section 6.06 as it
relates to Summit and the effectiveness of all resolutions adopted by the Board
of Directors (including committees thereof) and shareholders of Summit relating
to this Agreement, and the Merger and related transactions, a copy of which
resolutions shall be attached to such certificate.
Section 7.04. Officer's Certificate. Summit shall have furnished to UJB
a certificate signed by the Chairman or President of Summit, dated the Closing
Date, certifying to the satisfaction of the conditions set forth at Sections
6.01, 6.02 (last clause), 6.03 (last paragraph) and 6.04, as they relate to
Summit, and at Sections 7.01, 7.02, 7.07 and 7.09.
Section 7.05. Opinion of Summit's Counsel. UJB shall have received an
opinion of the General Counsel of Summit, dated the Closing Date and reasonably
satisfactory in form and substance to counsel for UJB, substantially to the
effect provided in Exhibit D.
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<PAGE> 45
Section 7.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to UJB, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 7.07. Consents to Summit Contracts. All consents, approvals or
waivers, in form and substance reasonably satisfactory to UJB, required to be
obtained in connection with the Merger from other parties to each mortgage,
note, lease, permit, franchise, loan or other agreement, or other contract to
which Summit or any of its subsidiaries is a party or by which they or any of
their assets or properties may be bound or committed, which contract is material
to the business, operations, assets, or financial condition of Summit and its
subsidiaries on a consolidated basis, shall have been obtained.
Section 7.08. FIRPTA Affidavit. Summit shall have delivered to UJB an
affidavit of its Chairman, President or Chief Financial Officer stating, under
penalties of perjury, that Summit is not and has not been a United States real
property holding company (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
Section 7.09. Absence of Regulatory Agreements. Neither Summit nor Bank
shall be a party to any agreement or memorandum of understanding with, or
commitment letter to, or board of directors resolution submitted to or similar
undertaking made to, or be subject to any order or directive by, or be a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its respective
business or has a material adverse effect upon the Merger or upon the financial
condition of Summit or Bank and its subsidiaries taken as a whole, and neither
Summit nor Bank shall have been advised by any governmental or regulatory
authority that such authority is contemplating issuing or requesting, or
considering the appropriateness of issuing or requesting, any of the foregoing.
The receipt of the documents required by this Article VII by UJB shall in no way
constitute a waiver by UJB of any of the provisions of or its rights under this
Agreement.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATION OF SUMMIT
The obligation of Summit to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by Summit in writing:
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<PAGE> 46
Exhibit 1
Section 8.01. No Adverse Changes. During the period from December 31,
1994 to the Closing Date there shall not have been any UJB Material Adverse
Change.
Section 8.02. Representations and Covenants.
(a) Except with respect to matters resulting from transactions
specifically contemplated by this Agreement, all representations and warranties
made by UJB in this Agreement shall be true and correct in all material respects
on the date of this Agreement and, in all material respects, on the Closing Date
with the same force and effect as if such representations and warranties were
made on the Closing Date. The condition in this Section 8.02(a) shall be deemed
to be satisfied unless the failure of such representations and warranties to be
so true and correct shall constitute, individually or in the aggregate, a UJB
Material Adverse Change or have a material adverse impact upon the consummation
of the Merger and related transactions.
(b) UJB shall have complied in all material respects with all covenants
and agreements contained herein required to be performed by UJB on or before the
Closing Date.
(c) The following transactions, and actions reasonably necessary or
appropriate in connection therewith, are specifically permitted by this
Agreement:
(i) All actions necessary to consummate the merger and related
transactions contemplated by the Flemington Agreement;
(ii) The entry by UJB after the date hereof and prior to the Effective
Time into any agreement to acquire or merge with any company or other
entity, provided, however, that UJB shall not be permitted to enter
into agreements to make acquisitions of companies or other entities or
engage in mergers which are reasonably likely, as of the respective
dates of such agreements, to result in the issuance of consideration by
UJB and its subsidiaries of more than $200 million in any one
transaction or $300 million in all transactions (excluding the
Flemington Agreement), without the prior written agreement of the
President and Chief Executive Officer of Summit; and
(iii) The issuance by UJB of up to $550 million in the aggregate of
debt and equity, which shall be in addition to the consideration
permitted to be issued in transactions referred to in Sections
8.02(c)(i) and (ii) above; the issuance by UJB of Series R Preferred
Stock pursuant to UJB's Shareholder Rights Plan; and the redemption or
repurchase at market prices by UJB (subject to Section 5.13) of UJB
Stock, Series B Adjustable Rate Cumulative Preferred Stock, the Rights
attached to UJB Stock, or the Series R Preferred Stock issuable
pursuant to UJB's Shareholder Rights Plan.
Section 8.03. Secretary's Certificate. UJB shall have furnished to
Summit a certificate signed by the Secretary of UJB and dated the Closing Date,
certifying to the satisfaction of the condition set forth at Section 6.05 and at
Section 6.06 as it relates to UJB and to the effectiveness
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<PAGE> 47
Exhibit 1
of all resolutions adopted by the Board of Directors (including committees
thereof) and shareholders of UJB relating to this Agreement and the Merger and
related transactions, a copy of which resolutions shall be attached to such
certificate.
Section 8.04. Officer's Certificate. UJB shall have furnished to Summit
a certificate signed by the Chairman, a Vice Chairman, or the President of UJB,
dated the Closing Date, certifying to the satisfaction of the conditions set
forth at Sections 6.01, 6.02, 6.03 (last paragraph) and 6.04, as they relate to
UJB, and at Sections 8.01, 8.02 and 8.07.
Section 8.05. Opinion of UJB's Counsel. Summit shall have received an
opinion of the General Counsel of UJB, dated the Closing Date and reasonably
satisfactory in form and substance to counsel for Summit, substantially to the
effect provided in Exhibit E.
Section 8.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to Summit, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 8.07. Absence of Regulatory Agreements. Neither UJB nor any of
its bank subsidiaries shall be a party to any agreement or memorandum of
understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of UJB's business or has a material adverse effect upon the Merger or upon the
financial condition of UJB and its subsidiaries taken as a whole, and neither
UJB nor any of its bank subsidiaries shall have been advised by any governmental
or regulatory authority that such authority is contemplating issuing or
requesting, or considering the appropriateness of issuing or requesting, any of
the foregoing.
The receipt of the documents required by this Article VIII by Summit shall in no
way constitute a waiver by Summit of any of the provisions of or its rights
under this Agreement.
Section 8.08. Employment Agreement. UJB and Robert G. Cox shall each
have executed an employment agreement employing Robert G. Cox as President of
the Surviving Corporation, in the form attached hereto as Exhibit F, provided
he is able to serve.
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Exhibit 1
ARTICLE IX.
CLOSING; TERMINATION RIGHTS
Section 9.01. Closing. Unless a different place and time are agreed to
by the parties hereto, the closing of the Merger ("Closing") shall take place on
a date determined by UJB on at least five business days notice (the "Closing
Notice") given to Summit, at the office of UJB, 301 Carnegie Center, Princeton,
New Jersey, commencing at 10:00 a.m., which date shall be after, but not later
than 40 days after, the last to occur of the following:
(a) the date the Merger has been approved by the shareholders of both
Summit and UJB in accordance with, respectively, Section 4.03 and Section 5.03;
(b) if the transactions contemplated by this Agreement are being
contested in any legal proceeding, the date that such proceeding has been
brought to a conclusion favorable, in the judgment of UJB and Summit, to the
consummation of the transactions contemplated herein or such prior date as UJB
and Summit shall elect, whether or not such proceeding has been brought to a
conclusion; or
(c) the date all Required Consents have been received (and all waiting
periods required by statute or incorporated into such Required Consents have
expired).
Such date is sometimes referred to herein as the "Closing Date". At the Closing,
the parties will exchange certificates, legal opinions and other documents for
the purpose of determining whether the conditions precedent to the obligations
of the parties set forth herein have been satisfied or waived. After all such
conditions have been satisfied or waived, UJB shall cause the Certificate of
Merger to be filed with the Office of the Secretary of State of the State of New
Jersey in accordance with Section 1.06. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed so taken, executed and delivered simultaneously, and no proceedings shall
be deemed taken or any documents executed or delivered until all have been
taken, executed or delivered.
Section 9.02. Termination Rights.
(a) The Boards of Directors of Summit and UJB may terminate this
Agreement by mutual consent at any time prior to the Effective Time.
(b) If on the date the Closing must be held as determined by Section
9.01 all the conditions precedent to a party's obligation to close shall not
have been met, the Board of Directors of such party may terminate this Agreement
by giving written notice of such termination to the other party.
(c) The Board of Directors of either party may terminate this Agreement
in the event that:
(i) the shareholders of Summit or UJB at the respective meetings of
shareholders called for the purpose of approving the Merger, this
Agreement and the transactions contemplated by this Agreement, upon
voting, shall have failed to approve such by the requisite vote;
48
<PAGE> 49
Exhibit 1
(ii) a material breach of a warranty or representation or covenant made
by the other party shall have occurred and such breach has not been
cured, or is not capable of being cured, within 30 days after written
notice of the existence thereof shall have been given to the other
party, which breach would give the nonbreaching party the right under
Article VI, VII or VIII not to consummate the Merger;
(iii) the Closing is not consummated on or before August 31, 1996,
unless the failure of such occurrence shall be due solely to the
failure of the party seeking to terminate this Agreement to perform or
observe its agreements set forth in this Agreement required to be
performed or observed by such party on or before the Closing Date.
(iv) the other party does not execute and deliver the Option Agreement
in which it is the Issuer on September 11, 1995.
(d) Upon a termination of this Agreement pursuant to this Section 9.02:
(i) the obligations of the parties under this Agreement (except for those under
this Section 9.02 and Sections 4.13 and 5.11) shall terminate and be of no
further force or effect, each party and it respective officers, directors and
employees shall be mutually released and discharged from liability to the other
party or to any third parties hereunder, and no party or its officers, directors
or employees shall be liable to any other party for any costs or expenses paid
or incurred in connection herewith, and (ii) the expenses incurred in connection
with printing of the UJB Proxy Statement, the Summit Proxy-Prospectus and the
Registration Statement, and the filing fees of the SEC and the New York Stock
Exchange shall be borne equally by UJB and Summit; provided, however, that in
the event of a termination, this Section 9.02(d) shall not be construed to
relieve a breaching party from liability for any uncured willful breach of this
Agreement which gave rise to such termination.
(e) Notwithstanding any termination of this Agreement, (i) Summit shall
indemnify and hold UJB harmless from and against any claim by any broker or
finder asserting a right to brokerage commissions or finders' fees as a result
of any action allegedly taken by or understanding allegedly reached with Summit
and (ii) UJB shall indemnify and hold Summit harmless from and against any claim
by any broker or finder asserting a right to brokerage commissions or finders'
fees as a result of any action allegedly taken by or understanding allegedly
reached with UJB.
(f) Except as provided otherwise herein in the event of a termination
of this Agreement, Summit and its subsidiaries shall bear their own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger, provided, however, that UJB shall pay all printing and
mailing expenses and filing fees associated with the Registration Statement, the
Summit Proxy-Prospectus, the UJB Proxy Statement and regulatory applications.
49
<PAGE> 50
ARTICLE X
MISCELLANEOUS
Section 10.01. Press Releases. At all times until the Closing Date or
the termination of this Agreement, each party shall promptly advise and consult
with the other prior to issuing, or permitting any of its subsidiaries,
directors, officers, employees or agents to issue, any press release or other
information to the press or any third party with respect to this Agreement, or
the transactions contemplated hereby.
Section 10.02. Article and Section Headings. Article and section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Section 10.03. Entire Agreement; Amendments. This Agreement, the Summit
Schedules, the Post-Signing Disclosure List and the Exhibits hereto and thereto,
if any, and the Option Agreements to be entered into by the parties hereto
constitute the entire agreement between the parties pertaining to the subject
matter hereof and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as
specifically set forth herein or therein. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby (or in the case of a termination occurring pursuant to
Section 9.02 by the party exercising a right to terminate this Agreement). No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof or thereof (whether or not
similar), nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided in the instrument granting such waiver. The parties hereto
may amend or modify this Agreement in such manner as may be agreed upon by a
written instrument executed by the parties, except that, after the meetings
described at Section 4.03 and 5.03 hereof, no such amendment or modification
shall reduce the amount, or change the forms, of consideration to be received by
the shareholders of Summit contemplated by this Agreement, unless such
modification is submitted to a vote of the shareholders of Summit, or increase
the amount of consideration to be paid by UJB unless such modification is
submitted to a vote of the shareholders of UJB.
Section 10.04. Survival of Representations, Warranties and Covenants.
No investigation made by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for those representations, covenants
and agreements contained herein and therein which by their terms apply in whole
or in part after the Effective Time.
50
<PAGE> 51
Section 10.05. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be deemed to have been given,
unless otherwise specified in a particular provision of this Agreement, if
placed in the mail, registered or certified, postage prepaid, or if delivered
personally or by courier, receipt requested, or by facsimile transmission,
receipt acknowledged addressed as follows:
UJB UJB Financial Corp.
Attn: John G. Collins
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3422
Facsimile No.: 609-987-3435
With a copy to: Richard F. Ober, Jr., Esq.
UJB Financial Corp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3442
Facsimile No.: 609-987-3435
Summit: The Summit Bancorporation
Attn: Robert G. Cox
One Main Street
Chatham, NJ 07928
Telephone No.: 201-701-2505
Facsimile No.: 201-701-2520
With a copy to: Charles R. Berman, Esq.
Bourne, Noll & Kenyon
382 Springfield Avenue
Springfield, NJ 07901
Telephone No.: 908-277-2200
Facsimile No.: 908-277-6808
or to such other address as such party may designate by notice to the others,
which change of address shall be deemed to have been given upon receipt.
A notice or other communication hereunder shall be deemed delivered (i)
if mailed by certified or registered mail to the proper address, with adequate
postage prepaid, on the fifth business day following posting or (ii) if
delivered by other means, when received by the party to whom it is directed.
51
<PAGE> 52
Section 10.06. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
Section 10.07. Counterparts. This Agreement is being executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 10.08. Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 10.09. Extensions; Waivers and Consents. Either party hereto,
by written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by the
shareholders of Summit and UJB, subject to the provisions of Section 10.03
hereof: (i) any inaccuracies of the other party in the representations and
warranties in this Agreement or any other document delivered pursuant hereto or
thereto; (ii) compliance with any of the covenants or agreements of the other
party contained in this Agreement; (iii) the performance (including performance
to the satisfaction of a party or its counsel) by the other party of any of its
obligations hereunder or thereunder; and (iv) the satisfaction of any conditions
to the obligations of the waiving party hereunder or thereunder. Any consent or
approval of a party hereunder shall be effective only if signed by the Chairman,
Vice Chairman, President or Chief Financial Officer of such party. Subject to
Section 10.03, no such instrument, consent or approval may modify the form or
amount of consideration to be received by the shareholders of Summit.
Section 10.10. Business Day. The term "business day" shall mean any day
that is not a Saturday, Sunday or legal holiday in the State of New Jersey or a
day on which banking institutions chartered or licensed by the State of New
Jersey are obligated or authorized by law or executive order to close.
52
<PAGE> 53
Exhibit 1
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seals to be hereunto affixed as of the date first above written.
CORPORATE SEAL UJB FINANCIAL CORP.
Attest /s/ Richard F. Ober, Jr. By /s/ T. Joseph Semrod
------------------------------- -------------------------------------
Richard F. Ober, Jr. T. Joseph Semrod
Secretary Chairman of the Board, President
and Chief Executive Officer
CORPORATE SEAL THE SUMMIT BANCORPORATION
Attest /s/ John F. Kuntz By /s/ Robert G. Cox
------------------------------- -------------------------------------
John F. Kuntz Robert G. Cox
Secretary President and Chief Executive Officer
53
<PAGE> 1
EXHIBIT 2
UJB FINANCIAL CORP. STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREEMENT IS SUBJECT TO RESALE
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT, dated as of the 11th day of September, 1995
(this "Agreement"), between The Summit Bancorporation, a New Jersey corporation
("Grantee"), and UJB Financial Corp., a New Jersey corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have on a date prior to the date hereof,
entered into an Agreement and Plan of Merger, dated as of the 10th day of
September, 1995 (the "Merger Agreement"). (Capitalized terms used in this
Agreement and not defined herein but defined in the Merger Agreement shall have
the meanings assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee's entering into the
Merger Agreement and the issuance by Grantee of an option to Issuer on terms and
conditions substantially similar to those of this Agreement, and in
consideration therefor, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 11,450,000 fully paid and nonassessable shares of the common
stock, par value $1.20 per share, of Issuer ("Common Stock") at a price per
share of $36.625 (such price, as adjusted as hereinafter provided, the "Option
Price"). The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth. In no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9% of the number of shares of Common Stock then
issued and outstanding (without consideration of any shares of Common Stock
subject to or issued pursuant to the Option).
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option, in
whole or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate and
be of no further force and effect upon the earliest to occur of (i) the time
immediately prior to the Effective Time, (ii) the termination of the Merger
Agreement in accordance with the terms thereof prior to the occurrence of an
Extension Event, other than a termination of the Merger Agreement by the Grantee
pursuant to Section 9.02(c)(ii) thereof
<PAGE> 2
(if the breach by Issuer giving rise to such right of termination is
volitional), or (iii) 15 months after the termination of the Merger Agreement
following the occurrence of an Extension Event (as defined below), or the
termination of the Merger Agreement by Grantee pursuant to Section 9.02(c)(ii)
thereof (unless the breach by Issuer giving rise to such right of termination is
non- volitional), and provided further, that any purchase of Common Stock upon
exercise of the Option shall be subject to applicable law, and provided further,
that the Option may not be exercised, nor may Grantee require Issuer to
repurchase the Option (as set forth in Section 7 hereof), if, at the time of
exercise or repurchase, Grantee is in breach of any covenant or obligation
contained in the Merger Agreement and, if the Merger Agreement has not
terminated prior thereto, such breach would entitle Issuer to terminate the
Merger Agreement. The events described in clauses (i) - (iii) in the preceding
sentence are hereinafter collectively referred to as Exercise Termination
Events. As provided in Section 8, the rights set forth therein shall terminate
upon an Exercise Termination Event and, as provided in Sections 6 and 7 hereof,
the rights to deliver requests pursuant to Sections 6 or 7 shall terminate 12
months after an Exercise Termination Event, subject, in such case, to the
provisions of Section 9.
(b) The term "Extension Event" shall mean any of the following events
or transactions occurring without the Grantee's prior written consent after the
date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary"), shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for purposes
of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"), and the rules and regulations thereunder) other than Grantee or
any of its subsidiaries (each a "Grantee Subsidiary") or the Board of Directors
of Issuer shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction with any person other than Grantee or any
Grantee Subsidiary. For purposes of this Agreement, "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction, involving
Issuer or any of Issuer's banking subsidiaries ("Bank Subsidiaries"), (x) a
purchase, lease or other acquisition of 10% or more of the aggregate value of
the assets or deposits of Issuer or any Bank Subsidiary, (y) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of Issuer
or a Bank Subsidiary, or (z) any substantially similar transaction, provided,
however, that in no event shall (i) any merger, consolidation or similar
transaction involving Issuer or any Bank Subsidiary in which the voting
securities of Issuer outstanding immediately prior thereto continue to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity of any such transaction) at least 65% of the combined
voting power of the voting securities of the Issuer or the surviving entity
outstanding after the consummation of such merger, consolidation, or similar
transaction, or (ii) any internal merger or consolidation involving only Issuer
and/or Issuer Subsidiaries, be deemed to be an Acquisition Transaction, provided
that any such transaction is not entered into in violation of the terms of the
Merger Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary)
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of securities representing
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<PAGE> 3
10% or more of the aggregate voting power of Issuer or any Bank Subsidiary (the
term "beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the Securities Exchange Act, and the rules
and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction (including, without
limitation, any situation in which any person other than Grantee or any Grantee
Subsidiary shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to, a tender offer
or exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such person would own or control securities
representing 10% or more of the aggregate voting power of Issuer or any Bank
Subsidiary);
(iv) After any person other than Grantee or any Grantee
Subsidiary has made or disclosed an intention to make a proposal to Issuer or
its shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below);
(v) Any person other than Grantee or any Grantee Subsidiary
shall have filed an application with, or given a notice to, whether in draft or
final form, the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or administrative
agency or commission, domestic or foreign (each, a "Governmental Authority"),
for approval to engage in an Acquisition Transaction; or
(vi) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been called by the
Board of Directors of Issuer in accordance with Section 5.03 of the Merger
Agreement or held or shall have been canceled prior to termination of the Merger
Agreement or Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to the consummation of the Merger the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case after an
Extension Event;
(vii) any Purchase Event (as defined below).
(c) The term "Purchase Event" shall mean either of the following events
or transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of securities representing 25% or
more of the aggregate voting power of Issuer or any Bank Subsidiary; or
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<PAGE> 4
(ii) The occurrence of an Extension Event described in Section
2(b)(i) except that the percentage referred to in clauses (x) and (y) shall be
25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Extension Event or Purchase Event; provided however, that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares of
Common Stock it will purchase pursuant to such exercise, (ii) a place and date
not earlier than three business days nor later than 90 business days from the
Notice Date for the closing of such purchase (the "Closing Date") and (iii) that
the proposed exercise of the Option shall be revocable by Grantee in the event
that the transaction constituting a Purchase Event that gives rise to such
written notice shall not have been consummated prior to exercise of the Option;
provided that if prior notification to or approval of the Federal Reserve Board
or any other Governmental Authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run from the later of (x)
the date on which any required notification periods have expired or been
terminated and (y) the date on which such approvals have been obtained and any
requisite waiting period or periods shall have expired. For purposes of Section
2(a), any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. Grantee shall have the right to revoke its proposed exercise
of the Option in the event that the transaction constituting a Purchase Event
that gives rise to such right to exercise shall not have been consummated prior
to exercise of the Option, pursuant to the statement of such right in the
written notice exercising the Option as provided in clause 2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender
this Agreement (and the Option granted hereby) to Issuer and pay to Issuer the
Option Price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated by Issuer; provided, however, that failure or refusal of Issuer to
designate such a bank account shall not preclude Grantee from exercising the
Option.
(g) At such closing, simultaneously with the delivery of the Option
Price in immediately available funds as provided in Section 2(f), Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Common Stock purchased by Grantee and, if the Option should be
exercised in part only, a new Option Agreement granting a new Option evidencing
the rights of Grantee thereof to purchase the balance of the shares of Common
Stock purchasable hereunder. All shares of Common Stock issued upon exercise of
the Option shall be accompanied by the same UJB Financial Corp. Shareholder
Rights as held by a majority of the holders of outstanding Common Stock.
(h) Certificates for Common Stock delivered at a closing hereunder
shall be endorsed with
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<PAGE> 5
a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between The Summit
Bancorporation and UJB Financial Corp. ("Issuer") dated as of the 11th
day of September, 1995. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), or an opinion of counsel, in form and substance
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of the written notice of
exercise of the Option provided for in Section 2(e) and the tender of the Option
Price on the Closing Date in immediately available funds, Grantee shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common Stock
shall not then actually be delivered to Grantee. Issuer shall pay all expenses
and any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of Grantee or its nominee.
SECTION 3. Reservation of Shares. Issuer agrees: (i) that it shall at
all times until the termination of this Agreement have reserved for issuance
upon the exercise of the Option that number of authorized shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, all of which shares will, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"), or the Change in Bank Control
-5-
<PAGE> 6
Act of 1978, as amended, or any state banking law, prior approval of or notice
to the Federal Reserve Board or to any other Governmental Authority is necessary
before the Option may be exercised, cooperating with Grantee in preparing such
applications or notices and providing such information to the Federal Reserve
Board and each other Governmental Authority as they may require) in order to
permit Grantee to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) to take all action provided
herein to protect the rights of Grantee against dilution.
SECTION 4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
SECTION 5. Adjustment upon Change of Capitalization. The number of
shares of Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any
change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise to become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding (without consideration of any shares of Common
Stock subject to or issued pursuant to the Option).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment. In no event
shall the Option Price be
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<PAGE> 7
adjusted to less than the par value of the Common Stock to be issued at such
Option Price.
(c) It is intended by the parties hereto that the adjustments provided
by this Section 5 shall fully preserve the economic benefits of this Agreement
for Grantee.
SECTION 6. Registration Rights.
(a) Demand Registration Rights. After the occurrence of a Purchase
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) delivered prior to an Exercise
Termination Event or at the request of a holder of any of the shares of Common
Stock issued pursuant hereto) delivered no later than 12 months after an
Exercise Termination Event, promptly prepare, file and keep current a shelf
registration statement under the Securities Act covering this Option or any
shares issued and issuable pursuant to the Option (the "Option Shares") and
shall use its best efforts to cause such registration statement to become
effective and remain current and to qualify this Option or any such Option
Shares or other securities for sale under any applicable state securities laws
in order to permit the sale or other disposition of this Option or any Option
Shares in accordance with any plan of disposition requested by Grantee;
provided, however, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a period
of time (not in excess of 90 days) if in its judgment such filing would require
the disclosure of material information that Issuer has a bona fide business
purpose for preserving as confidential. Issuer will use its best efforts to
cause such registration statement first to become effective as soon as
practicable after the filing thereof and then to remain effective for such
period not in excess of 180 days from the day such registration statement first
becomes effective, or such shorter time as may be necessary to effect such sales
or other dispositions. Grantee shall have the right to demand two such
registrations. Grantee shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed hereunder. In
connection with any such registration, Issuer and Grantee shall provide each
other with representations, warranties, and other agreements customarily given
in connection with such registrations. If requested by any Grantee in connection
with such registration, Issuer and Grantee shall become a party to any
underwriting agreement relating to the sale of Option Shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. Notwithstanding the foregoing, if Grantee revokes any exercise
notice or fails to exercise any Option with respect to any exercise notice
pursuant to Section 2(e), Issuer shall not be obligated to continue any
registration process with respect to the sale of Option Shares.
(b) Additional Persons With Registration Rights. Upon receiving any
request under this Section 6 from any Grantee, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be
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<PAGE> 8
more than one Grantee as a result of any assignment or division of this
Agreement.
(c) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to this Section 6 (including the related
offerings and sales by holders of Option Shares) and all other qualifications,
notification or exemptions pursuant to Section 6.
(d) Indemnification. In connection with any registration under this
Section 6, Issuer hereby indemnifies the Grantee, and each officer, director and
controlling person of Grantee, and each underwriter thereof, including each
person, if any who controls such holder or underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement contained in
any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party expressly
for use therein, and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such Grantee, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and
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<PAGE> 9
expenses of such counsel (other than reasonable costs of investigation) shall be
paid by the indemnified party unless (i) the indemnifying party either agrees to
pay the same, (ii) the indemnifying party fails to assume the defense of such
action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interests
of the indemnified party. No indemnifying party shall be liable for the fees and
expenses of more than one separate counsel for all indemnified parties or for
any settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this Section 6(d) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, the
Grantee and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Grantee be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any Grantee
to indemnify shall be several and not joint with other Grantees.
(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Grantee thereof in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Grantee with any information
necessary in connection with the completion and filing of any reports or forms
required to be filed by Grantee under the Securities Act or the Exchange Act, or
required pursuant to any state securities laws or the rules of any stock
exchange.
SECTION 7. Repurchase at the Option of Grantee or Owner. (a) Upon the
occurrence of a Repurchase Event (as defined below), (i) at the request (the
date of such request being the "Request Date") of Grantee, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised and (ii) at the request (the date of such request being the
"Request Date") of the owner of Option Shares from time to time (the "Owner"),
delivered within 12 months of the occurrence of a Repurchase
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<PAGE> 10
Event (or such later period as provided in Section 9), Issuer shall repurchase
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender offer or exchange offer therefor has been made after the date
hereof and on or prior to the Request Date, (ii) the price per share of Common
Stock paid or to be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the highest last
sale price for shares of Common Stock within the 90-day period ending on the
Request Date quoted on the New York Stock Exchange (as reported by The Wall
Street Journal, or, if not reported thereby, another authoritative source), (iv)
in the event of a sale of all or substantially all of Issuer's assets, the sum
of the price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally-recognized
independent investment banking firm selected by Grantee or the Owner, as the
case may be, divided by the number of shares of Common Stock outstanding at the
time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally-recognized
independent investment banking firm selected by Grantee or the Owner, as the
case may be, whose determination shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within the later to occur of (x) five
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto and (y)
the time that is immediately prior to the occurrence of a Repurchase Event,
Issuer shall deliver or cause to be delivered to Grantee the Option Repurchase
Price or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited from so delivering under applicable
law and regulation or as a consequence of administrative policy.
(c) Issuer hereby undertakes to use its reasonable efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall promptly
so notify Grantee and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to Grantee and/or the Owner, as appropriate, the
portion of the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full
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<PAGE> 11
or in any substantial part, Grantee or the Owner, as appropriate, may revoke its
notice of repurchase of the Option or the Option Shares either in whole or in
part whereupon, in the case of a revocation in part, Issuer shall promptly (i)
deliver to Grantee and/or the Owner, as appropriate, that portion of the Option
Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Common Stock equal to
the number of shares of Common Stock purchasable immediately prior to the
delivery of the notice of repurchase less the number of shares of Common Stock
covered by the portion of the Option repurchased or (B) to the Owner, a
certificate for the number of Option Shares covered by the revocation.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed
to have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary any purchase, lease
or other acquisition of all or a substantial portion of the assets of Issuer or
any Bank Subsidiary, other than any such transaction which would not constitute
an Acquisition Transaction pursuant to the proviso to Section 2(b)(i) hereof or
(ii) upon the acquisition by any person of beneficial ownership of securities
representing 50% or more of the aggregate voting power of Issuer or any Bank
Subsidiary, provided that no such event shall constitute a Repurchase Event
unless an Extension Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event if an Extension Event shall have
occurred prior to the occurrence of an Exercise Termination Event.
(e) Issuer shall not enter into any agreement with any party (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole discretion,
to require such other party to perform such obligations.
SECTION 8. Substitute Option in the Event of Corporate Change. (a) In
the event that prior to an Exercise Termination Event, Issuer shall enter into
an agreement (i) to consolidate or merge with any person, other than Grantee or
a Grantee Subsidiary, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the aggregate voting power of the merged company, or (iii) to sell
or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation (the Acquiring Corporation and any such controlling person being
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<PAGE> 12
hereinafter referred to as the Substitute Option Issuer)
(b) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7) multiplied by the number of
shares of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined) The exercise price of
the Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Option Price multiplied by a
fraction in which the numerator is the number of shares of the Common Stock for
which the Option was theretofore exercisable and the denominator is the number
of shares of Substitute Common Stock for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided further that the terms of
the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or any
substantial part of the Issuer's assets (or the assets of Issuer
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average last sale price of
a share of the Substitute Common Stock (as reported by The Wall Street
Journal or, if not reported therein, by another authoritative source)
for the one year immediately preceding the consolidation, merger or
sale in question, but in no event higher than the last sale price of
the shares of the Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by such
person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (e), the Substitute Option Issuer shall make a cash payment
to Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this
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<PAGE> 13
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in the clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer.
SECTION 9. Extension of Time for Regulatory Approvals. Notwithstanding
Sections 2(e), 6, 7 and 11, if Grantee has given the notice referred to in one
or more of such Sections, the exercise of the rights specified in any such
Section shall be extended (a) if the exercise of such rights requires obtaining
regulatory approvals, to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, and (b) to the extent necessary to avoid
liability under Section 16(b) of the Securities Exchange Act by reason of such
exercise; provided that in no event shall any closing date occur more than 18
months after the related Notice Date, and, if the closing date shall not have
occurred within such period due to the failure to obtain any required approval
by the Federal Reserve Board or any other Governmental Authority despite the
reasonable efforts of Issuer or the Substitute Option Issuer, as the case may
be, to obtain such approvals, the exercise of the Option shall be deemed to have
been rescinded as of the related Notice Date. In the event (a) Grantee receives
official notice that an approval of the Federal Reserve Board or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the Option in
connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative exercising of rights pursuant to
Sections 2(e), 6, 7 and 11, hereof in the event that the exercising of any such
rights shall not have occurred due to the failure to obtain any required
approval referred to in this Section 9.
SECTION 10. Issuer Warranties. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at
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<PAGE> 14
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) Upon receipt of the necessary regulatory approvals as contemplated
by this Agreement, the execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of, or a default under, its certificate of incorporation or by-laws, or the
comparable governing instruments of any of its subsidiaries, or (ii) a breach or
violation of, or a default under, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its subsidiaries is subject, that would in any case give any other person the
ability to prevent or enjoin Issuer's performance under this Agreement in any
material respect.
SECTION 11. Assignment of Option by Grantee. (a) Neither of the parties
hereto may assign any of its rights or delegate any of its obligations under
this Agreement or the Option created hereunder to any other person without the
express written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event;
provided, however, that until the date 15 days following the date at which the
Federal Reserve Board approves an application by Grantee under the BHC Act to
acquire the shares of Common Stock subject to the Option, Grantee may not assign
its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase securities representing in excess of 2% of the aggregate voting
power of Issuer, (iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf, or (iv) any other manner approved by the
Federal Reserve Board. Grantee will pay any reasonable out-of-pocket costs and
expenses of Issuer in connection with any such assignment. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended and to certain provisions
of an agreement between The Summit Bancorporation and UJB Financial
Corp. ("Issuer") dated as of the 11th day of September, 1995. A copy of
such agreement is on file at the principal office of Issuer and will be
provided to any permitted assignee of the Option without change upon
receipt by Issuer of a written request therefor."
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<PAGE> 15
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute assignments without such reference if the Option has been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such assignments shall
bear any other legend as may be required by law.
SECTION 12. Application for Regulatory Approval. If Grantee is entitled
to exercise the Option and has sent a notice to Issuer pursuant to Section 2(e),
each of Grantee and Issuer will use its reasonable efforts to make all filings
with, and to obtain consents of, all third parties and the Federal Reserve Board
and other Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application for listing or quotation, as the case may be, of the shares
of Common Stock issuable hereunder on the New York Stock Exchange and applying
to the Federal Reserve Board under the BHC Act and to state banking authorities
for approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be enforceable
by either party hereto through injunctive or other equitable relief. Both
parties further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
SECTION 14. Separability of Provisions. If any term, provision,
covenant or restriction contained in this Agreement is held by a court or a
federal or state regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that Grantee is not permitted to acquire,
or Issuer is not permitted to repurchase, pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1 (as adjusted pursuant hereto),
it is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
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SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 18. Expenses. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Merger Agreement. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
SECTION 21. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time of
such selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
SECTION 22. Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
SECTION 23. No Rights as Shareholder. Except to the extent Grantee
exercises the Option, Grantee shall have no rights to vote or receive dividends
or have any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 24. Grantee Representation. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not being,
and will not be, as the case may be, acquired with a view to the public
distribution thereof in the United States except as provided for in Sections 6
and 11 hereof and neither the Option nor any Option Shares or other securities
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<PAGE> 17
acquired by Grantee upon exercise of the Option will be transferred or otherwise
disposed of by Grantee except in a transaction registered or exempt from
registration under the Securities Act.
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<PAGE> 18
Exhibit 2
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
The Summit Bancorporation
By: s/ Robert G. Cox
---------------------------------
UJB Financial Corp.
By: s/ T. Joseph Semrod
---------------------------------
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